As part of a standard simulation, EnCompass will calculate the marginal cost (shadow price) of meeting energy and ancillary service requirements.
This is equivalent to a system lambda type of calculation which considers incremental fuel and variable costs, but not any startup or no-load costs. EnCompass also has an option to dynamically adjust energy and ancillary bids to account for these costs, and minimize the amount of uplift that would be needed to make generators whole.
Capacity / Scarcity Pricing
EnCompass has the ability to forecast annual capacity prices using the same type of methodology used in PJM and New York, including downward-sloping demand curves. New capital projects and resources eligible for retirement will submit capacity bids to recover fixed operating and capital carrying costs, less any profits from the energy and ancillary service markets. If no capacity market is modeled, or if there are still unrecovered costs, EnCompass will dynamically adjust energy and ancillary service bids, similar to the scarcity pricing mechanism used in ERCOT.
Complete EnCompass databases for North American power markets have been developed by Horizons Energy. With these databases, EnCompass can be used to forecast 30-year prices for energy, ancillary service, capacity, emission allowances, and renewable energy. Other market metrics can be produced including hourly generator operations, transmission flows, and congestion costs.
Contact Anchor Power Solutions for a Custom Demonstration of EnCompass Software