BdE, Breves de Energía, was founded in March 2013 as a platform for disseminating information and strategic analysis on energy and environmental topics. In 2019 we began offering the following consulting services:
Market Value of Renewable Energies
The market value of wind and solar energy (i.e. income in $/MWh on a spot market) tends to decline as penetration by these technologies increases. To calculate the real value of these projects, suitable modeling of the capacity system is needed. Such modeling allows us to assess the impacts of different scenarios that incorporate these technologies into the system.
At BdE we have developed models for quantifying the impact of renewable energies in a capacity system that can be used by investors to analyze new projects or value existing assets.
Stabilized Price for Small Generators
Access to a stabilized price (SP) provides stimulus for distributed generation, which is normally immersed in electrical grids. The effect of the SP is similar to the generator selling its energy using a financial supply agreement, enabling it to access project financing that would otherwise be difficult to attain.
In a recent article published extensively throughout the country, we explained the basis for developing the incentive policy for small generators and calculating the stabilized price. Based on this, at BdE we have developed a model that offers our clients accurate forecasts for valuing distributed generation projects.
The design of energy markets determines incentives for producing and consuming electricity. A good market design leads to efficient investments and operations. A bad design, in contrast, leads to additional costs and, in extreme cases, to blackouts.
BdE has conducted several studies on this topic. In particular, an article published in the Center for Public Studies (CEP) sparked debate in Chile regarding the commercialization of electricity and another article, also published in the CEP, evaluates the cost of defining quotas for renewable energy.
Our experience in the electricity market enables us to help our clients identify and value potential opportunities and risks that may arise.
A capacity payment mechanism establishes a payment per megawatt (MW) for owners of generation units, in addition to income for energy sales and ancillary services. Allocation of this payment is a probabilistic calculation that depends to a large extent on the availability of power plants. In an article published in The Electricity Journal we describe the allocation mechanism in Chile, and calculate its equivalence with only energy-based markets.
As capacity income regulation undergoes constant revision, we are available to help our clients calculate this income and identify potential risks.
Modeling Electricity Markets
Future energy prices are not only based on the investment and strategic decisions but are also impacted by a country’s public policy. We work with our clients to develop consistent scenarios and model medium and long-term electricity prices using local and in-house models.
For example, BdE helped draft the chapter Microeconomic Reforms and Competition in the Electricity Market in the book Growth Opportunities for Chile, edited by Vittorio Corbo. We have authored other papers on the valuation of environmental and climate policies in the generation sector, published in the magazine Energy Policy, and on the cost-efficiency of incentive policies for renewable energies.
Other examples of electrical sector modeling can be found in a study related to hydrological uncertainty in capacity systems, published by CIGRE, while another article that applies elasticity of demand to hydrothermal dispatch models was published in the magazine Energy Policy.
Environmental Taxes and Carbon Prices
Law No. 20,780 created taxes on emissions of particulate matter, nitrogen oxides, sulfur dioxide and carbon dioxide. The tax is applied mainly to emissions from fixed sources that meet certain requirements.
Depending on the contractual situation, these taxes are transferred directly to customers. While the tax on carbon has been set by law, its price must increase for the country to meet its climate targets, which will impact electricity prices and efficient system expansion.
In our articles, BdE was concerned early on with including the impact of environmental taxes on financial assessments for generation projects. Therefore, we can help our determine the value of potential increases in these charges.
Ancillary Grid Services
In order to function properly, a power system must always be able to balance generation and consumption, maintaining frequency and voltages within predetermined ranges. Also, if for any reason the system fails, the grid must be capable of restarting and operating again. Ancillary services are responsible for these functions.
In Chile, depending on their nature, ancillary grid services are auctioned or tendered. In a working document, BdE proposed the basis of a payment mechanism for ancillary services in Chile. We can also offer our clients assistance in calculating the value of such grid services.
Transmission System Tolls and Expansion
Law No. 20,936 completely reformed the mechanism for allocating tolls among generators and customers in Chile. The new system transfers all charges directly to customers. However, for a while there will be a complex transition period in which the new system co-exists with the repealed system. In our publication in the journal IEEE, we describe how tolls for using the transmission system are allocated between generators and customers. In addition, in another recent article we explained the current system for allocating tolls and the transition period.
Thus, toll payment is an important aspect that an investor must take into account when evaluating generation and transmission assets. Likewise, the direct transfer of these charges to demand requires special attention from clients. Identification of potential congestion in the transmission system is also a relevant topic where BdE can support its clients.
Financial Assessment of Contracts
Unregulated customers in the National Electrical System must frequently negotiate their supply agreements. For a correct financial assessment of a contract, one must first identify the different technological options for supply and then calculate the related long-term price projections. A good assessment must also be able to estimate the risks related to the different supply options.
At BdE we can assist our clients in choosing the best contracting option and drafting the supply agreement.
Our teaching and industry experience enable us to address important energy-related topics in a straightforward manner. We offer courses directed toward companies within the energy industry. Our courses examine energy from an integral perspective, including technological development, the fossil fuel industry, market regulations, price forecasts, risk management and environmental and climate impacts.