Services

Special arrangements have to be implemented for trading to take place in electricity and gas markets. Designing a market is about defining standard products that can be exchanged between market participants. In the electricity, and sometimes in the gas industry, such market design extends to the organisation of centralised marketplaces, when trading near real time can take place and where the system operator procures the services needed to meet system security conditions at all times.

Our experts have been directly involved in the design and implementation of one of the largest electricity markets in Europe, and have advised regulators, market operators and system operators in several countries.

We advise on matters such as:

• • The design of spot and ancillary service markets
• • Balancing and settlemen systems
• • Integration in the market of distributed resources and demand response
• • Scarcity pricing
• • Auction design
• • Optimal bidding strategies
• • Allocation of transmission rights
• • Capacity remuneration schemes
• • Load profiling for small final customers
• • Mechanisms to ensure gas security of supply

The focus of network regulation varies depending on the development of the industry. We have worked for regulators whose main concern was attracting investment to achieve universal service coverage. In more mature industries, greater emphasis is placed on cost effectiveness and the regulated businesses are required to provide thourough justification for their investment requests, in particular by clarifiyng their connection with service features that are valuable to network users.

The European decarbonisation targets are spurring a wave of investment in trasmission and distribution intelligence, to support growth of distributed generation and the supply of flexibility by dispersed resources. Further, to the extent that distribution network operators take on dispatching resposibilites of load and generators connected to their systems, new regulatory incentive schemes might be beneficial.

As per energy retail, tariff regulation may still be relevant in liberalised markets if competition is not developed enough and for the protection of weak customers. The main design issue, in that case, is avoiding that access to regulated tariffs discourages customer participation in the market.

Our experts have been involved in rate review proceedings involving investment plans worth billions of euros, both as regulator and on the regulated business side.

We advise on matters such as:

• • Tariff design
• • Incentive schemes for network and system operators
• • Cost-benefit analysis of investment plans
• • Asset evaluation
• • Assessment of competition in retail markets
• • Retail tariffs

The combination of policies for decarbonisation, liberalisation and digital technologies are creating room for innovative business models, appealing to traditional as well as new players.

We support clients in identifying and assessing business opportunities, leveraging on our knowledge of the current arrangements and expected developments in the industry. Further, we act as advisors in corporate transactions.

Our services include:

• • Market studies and scenario development
• • Price forecast
• • Business planning
• • Commercial and regulatory due diligence
• • Asset evaluation

The Regulation on Wholesale Energy Markets Integrity and Transparency (REMIT) supports open and fair competition in the European wholesale energy markets by prohibiting trading based on inside information and market manipulations. REMIT is meant to tailor the trading supervision measures that are standard in financial markets to the special trading arrangements implemented in the energy sectors. REMIT is an innovative piece of legislation and its content and scope are still being tested, even in front of the courts.

Assessing the behaviour of market participants against the obligations and prohibitions introduced by REMIT requires a thorough understanding of the intricate design of European energy markets, including the arrangements for wholesale trading of energy in the different timeframes, from years ahead to minutes ahead of consumption, the financial settlement system of electricity and gas trades, the procurement mechanisms for ancillary services, and the transmission rights allocation mechanisms.

Our experts have been directly involved in designing and implementing European energy markets, and also in shaping REMIT and its implementation. Alberto Pototschnig served as Director of the European Agency for the Cooperation of Energy Regulators (ACER) when REMIT was passed, and during the first years of its implementation. In this capacity, Alberto led the development of the first four editions of ACER's guidelines on REMIT application and the deployment of the ACER’s REMIT Information System (ARIS), the Agency’s IT system for data collection, data sharing, and automatic screening and monitoring of trading activities in wholesale energy products.

DFC supports energy market participants or regulators in the context of REMIT cases, including independent economic analysis, damage assessment, and expert testimony.

Robust arguments, clarity of presentation and unquestioned independence are key to success in commercial litigations, in particular on highly technical cases in the energy industry.

Our experts have acted as expert witnesses in private arbitrations and in front of civil courts, on multi-million worth disputes.

Our services cover a wide range of matters, including for example:

• • Asset evaluation
• • Risk mitigation policies in energy trading
• • Price reviews in long term gas supply contracts
• • Damages from competition law violations
• • Damages from violations of intellectual property rights

We provide economic analysis, advice and litigation support on all competition policy matters, working closely with clients and legal counsel.

We work on:

• • Market power abuse
• • Vertical agreements
• • Cartel allegations
• • Mergers, acquisitions and joint ventures
• • Intellectual property
• • Estimations and claims for damanges

While working on cases across the board, we have large experience on competition policy issues in the electricity and gas industries, where special technical features, ad hoc trading arrangements and complex regulatory frameworks determine how companies interact in the marketplace.

We develop our own optimisation models and data analysis tools. We interact with academic parteners on the design of mathematical models to address complex optimisation and forecast problems and we implement them in-house using tools such as GAMS, Cplex, SCIP, Python, R and Fortran.

We supplied industry-grade optimisation tools that have been embedded in business operations, including a dispatch software for a large virtual power plant, comprising multiple self-generation industrial sites, each featuring specific technical constraints.

We have developed an optimal security-constrained generation dispatch model that we use for long-term electricity price forecast and a gas model computing the optimal use of the European gas network, as well as prices at each hub, given gas prices at the entry points into Europe and transmission tariffs.

We are currently applying machine learning tools to investigate crucial commercial questions in the wholesale and retail electricity market.