www.cornwall-insight.com

Experts in energy, Exceptional advice

Consultancy

“At Cornwall Insight we prize excellence, innovation, curiosity and collaboration. These values help us to maintain our comprehensive understanding of the markets and they are perfectly embodied in the consulting work we undertake with our customers. We like nothing more than to solve our customers problems, assess their plans, evaluate their investments or build new ways of doing things that directly help them to succeed.”

– Gareth Miller, Chief Executive

54

the energy market landscape

Policy and regulation have become more complex and fluid in response to these challenges. Generation, networks and supply are growing increasingly inter-dependent. The impacts on markets from changes in the political and regulatory sphere are now further reaching and more difficult to evaluate than they have ever been. Macro political and economic uncertainty adds an additional challenge

to an already demanding mix of variables that energy businesses must consider when making their strategic plans.

The result is that pre-empting the form, simplifying the substance, and quantifying the effects of policy and regulatory change are business critical items on everyone's agenda.

The GB energy markets have undergone profound changes in the last three decades, firstly through electricity and gas liberalisation, then through the focus on decarbonisation and the rapid growth in low-carbon generation. Today, we sit at the cusp of technology innovation that is likely to profoundly transform how energy is produced, stored, distributed and consumed.

Why do we do what we do?

The energy market landscape

Navigating

76

clarity

We continually identify, report, research, analyse and evaluate regulatory, political and market changes that impact the energy markets in GB and beyond.

The result is an unrivalled base of knowledge, which we deliver to customers through our highly regarded subscription research services, training activities and our team of experienced consultants.

Our perspective is broad, with expert teams covering wholesale, retail and network aspects of the electricity and gas markets – facilitating a whole-system perspective of the impacts of change.

Our reach is long, with participation in major industry working groups and governance panels, providing intelligence on developments well-ahead of general market awareness.

Our insights are deep, with proprietary research illuminating key factors driving the current and future shape of the markets and presenting them in an accessible way as the industry moves into new and challenging terrain.

The ability to meet our customers' demands stems from a single key asset – insight.

Why us?

Our consultants have real-world experience accumulated by working in and around the energy markets over many years. They are a step-ahead as a result of Cornwall Insight’s wider coverage of all aspects of market, policy and regulatory change. And they have the modelling capability to translate well-informed, deeply researched and independent assessments of market change into financial impacts.

We have experience in all energy sectors. Whether it is retail, networks, wholesale markets, low-carbon or thermal generation, storage or demand side management, our consultants have the expertise to support projects. We also

have practical experience, in start-to-end market entry, finding routes to market, conducting investment due diligence, creating business cases, developingnew policies, regulations and forecasting value.

We are flexible in how we work. Our consultants agree project scopes directly with customers to meet their precise needs. We produce detailed reports or can deliver workshops and presentations, bespoke training, or board-level briefings. Our consulting assignments are project managed, with customers kept informed on progress and milestones, deliverables are peer reviewed and quality assured before customers receive them.

Our team of consultants leverage our insight and knowledge to deliver clear, relevant and commercially valuable services to our customers.

What do we do in our consultancy?

About Cornwall Insight

Creating

98

Cornwall Insight has hundreds of customers from all aspects of the energy markets. We are proud to be trusted advisors to• Energy suppliers• Generators across thermal and low-carbon technologies• Investors and professional advisors• All major government and regulatory bodies and• Local and national government

Our research and our experts are regularly referenced in the national media and by front bench politicians.In consultancy, we are proud to have worked with a wide range of companies, across many different areas of the energy markets.

Our experience

Powering the UK energy industry

1110

Our specialisms

Capacity and flexibility markets 12Retail markets 14Routes to market and PPAs 16Wholesale markets 18Network charging 20Interconnected markets 22 Supplier compliance assessments 24

Deliveringspecialist insight

1312

Our specialisms

Capacity and flexibility markets

What we do• Capacity Market analysis• Forecasts of clearing prices and volume by technology• Capacity Market qualification support• Prequalification support• Ancillary/balancing services forecasts• Mapping future system requirements against forecasts of available providers

to estimate future values for balancing• Embedded benefits modelling • Calculation of revenue distribution• Revenue stacking analysis• Comparisons of revenues different assets could earn under different schemes• Investment due diligence• Market entry

Case studiesBattery storage business caseCornwall Insight has been working with an independent renewables and storage developer to develop a view of the revenue streams, eligibility and interactions for a range of business cases, including behind the meter and standalone installations.

Capacity Market modelling and qualification supportCornwall Insight has undertaken several projects for independent generators wishing to gain an understanding of possible scenarios for Capacity Market clearing prices and competition. We have developed an internal model that is regularly updated to reflect market forces. Cornwall Insight has also helped multiple independent generators pre-qualify for the Capacity Market auctions.

Embedded benefits and flexible generation revenue streamsCornwall Insight developed a model to estimate the potential revenues available for a flexible generator over a 10-year horizon for a large merchant developer. Revenue streams included wholesale power, ancillary services and embedded benefits. Results were presented to the business development team and are being used to help formulate their business case.

Our electricity system continues to become more decentralised, "smarter", and characterised by increasing levels of new storage and intermittent capacity.

Specialist areas: flexibility, frequency, response, investment appraisal and energy policy. Tom works on a range of aspects of the UK and Irish energy markets, helping clients evaluate and deliver their strategic goals. At Cornwall Insight, Tom has:

• Supported a global institutional investor on energy supply and DSR due diligence• Supported on the commercial due diligence on a number of battery storage deals• Led the development of Cornwall Insight’s frequency report

Tom has 10 years’ experience working across a range of energy roles at EDF Energy, Ofgem and Origami Energy.

Tom Palmer, Principal Consultant 01603 604429 t.palmer@cornwall-insight.com

1514

Our specialisms

Retail markets

What we do• Market entry options and their implications• Market structure and comparative analysis• Acquisition, consolidation and due diligence• Strategic planning and usiness processes• Energy tariff modelling, analysis and comparison• Local authority market entry options• Legislative and licensing requirements associated with market entry• Regulatory support, credit and collateral requirements and compliance support• Market intelligence support and insight• Public sector energy procurement analysis• Analysis on the role of third party intermediaries• Evalutation of battery storage and its role in the market

Case studiesBusiness strategy development for a public buying organisationCornwall Insight was asked for advice on the markets for energy procurement and contract services for public sector and other non-domestic customers. The objective was to provide support in the formulation of a business development strategy for a local authority owned public buying organisation (PBO). We benchmarked the organisation against private sector third party intermediaries and other PBOs for services and charges, and set out a number of recommendations for how the organisation could maximise revenue in future.

Overview of the UK energy market and and optionsCornwall Insight was tasked with providing a general overview of the competitive landscape of the UK energy market. We also considered the relationships between independent suppliers and the Big Six.

Developing business cases for battery storageThis project was for a renewables and storage developer who wanted to move into energy supply. It focused on developing a view of the revenue streams, eligibility and interactions for a range of business cases, including behind the meter and standalone installations.

The retail markets have witnessed unprecedented change this decade, with scores of new entrants and established players adapting their strategies in light of new dynamics and drivers.

Specialist areas: retail market competition, retail pricing, metering, third party charges and private wire arrangements. Craig has extensive experience through his work with governments, investors, suppliers and large consumers. At Cornwall Insight, Craig has:

• Led a major project on non-commodity costs for a group of water companies• Supported exploratory work into local energy opportunities with Pixie Energy• Served as an industry expert in respect of a contract dispute involving a major energy retailer

Craig has over 20 years’ experience, having previously held roles at EIC, ICIS Heren and TXU Europe Energy.

Dr Craig Lowrey, Senior Consultant 01603 959905 c.lowrey@cornwall-insight.com

1716

Our specialisms

Routes to market and PPAs

What we do• Route to market strategy• Revenue analysis under route to market options• Interactions between subsidy, ancillary services and wholesale markets• Analysis of PPA offers and benchmarking• Investment commercial due diligence• Mid-stream and wholesale trading contracts• Roc and green certificate trading and contracts• Tolling arrangements and PPAs for flexible generators• Assessment of embedded benefits• Demystify complex industry rules – BSC, CUSC, DCUSA

Case studiesPPA strategy supportCornwall Insight has supported a multi-site generation developer in its strategy and tendering for PPAs. The sites included a CfD supported baseload site and a non-renewable baseload plant. Cornwall Insight’s support included benchmarking of PPA values, analysis of proposals and revenue assessments for the generation sites.

Flexible generation PPA supportCornwall Insight has been supporting a major developer of flexible and peaking generation in strategy development and tendering for PPAs. The work included route to market strategy development, market testing and assessment of multiple PPA proposals. The outputs were a presentation on strategy options, a summary report comparing the PPA proposals and a series of recommendations. This allowed the company to take forward investment in the project. Project finance due diligenceCornwall Insight developed a commercial due diligence report for a private equity investor and group of banks in relation to the re-financing of a solar PV portfolio. The report included assessments of the preferred route to market options, expert commentary on key PPA terms and a review of the competitive landscape for the offtake market.

In an environment of shrinking subsidy and adoption of smarter metering and new technologies the approach to contracting is evolving. Cornwall Insight is here to help you navigate the fast moving market.

Specialist areas: regulation, retail market entry, retail market competition, network charging and governance. Ed leads the consultancy team, working with clients to evaluate strategies for entering new markets, investing in new technologies and adopting new business models. At Cornwall Insight, Ed has:

• Represented consumers on the BSC and UNC Panels• Supported a major local authority through retail market entry• Driven major commercial due diligence for an institutional investor

Ed also has four years’ experience working at the Consumer Council, where he focused on fuel poverty and energy costs.

Ed Reed, Associate Director 01603 959885 e.reed@cornwall-insight.com

1918

Our specialisms

Wholesale markets

What we do• Support and insight on the wholesale markets, low-carbon support schemes,

third party charges and embedded benefits• Power market modelling• Bespoke financial modelling• Acquisition, consolidation and due diligence• Development of trading strategies, business processes and systems• Assessments of commercial arrangements with trading partners• Compliance support and impact analysis of future changes of policy and regulation

Case studiesModelling flexible generation revenueCornwall Insight developed a model for estimating the potential revenues available to a flexible generation asset over a 10-year horizon for a large merchant developer. The revenue streams included wholesale power, ancillary services and embedded benefits. The results presented were used to inform their business case.

Embedded benefits modellingCornwall Insight was commissioned by a large-scale independent utility to develop a model for estimating embedded benefits over a 10-year period at specific sites which included renewable and thermal generation and battery storage. The modelling approach considered potential changes to policy and regulatory direction regarding embedded benefits and provided scenarios of possible outcomes.

Investment due diligenceCornwall Insight undertook a review and benchmarking exercise of the trading arrangements in place between two energy supply companies for the purposes of informing an investor as part of its due diligence process. The output from the project was a report benchmarking the key terms of the arrangement and providing assessments of the possible alternative arrangements.

The need for gas imports continues to increase and electricity price drivers are changing as a result of greater interconnection, high penetration from renewables and new generation technologies.

Specialist areas: market fundamentals, retail supply modelling, energy storage, electricity generation and market forecasting. Tom is experienced in designing, delivering and assuring complex modelling projects. At Cornwall Insight, Tom has:

• Led the development of a power market model• Supported a major local authority in its financial modelling of the retail market• Led the development of bespoke modelling for a range of customers, including for

pumped storage, battery storage and gas peaking plant

Tom has nine years’ experience working in a range of roles at EDF Energy, including shift trading and fundamental analysis.

Tom Musker, Senior Consultant 01603 604413 t.musker@cornwall-insight.com

2120

Our specialisms

Network charging

What we do• Reports and workshops on complex regulatory change in network

charging possible impacts• Author focussed responses to consultations • Develop new proposals to change industry codes, including representation within

the working groups that progress the change• Monitor and take part in industry debate through participation industry panel

including the CUSC, BSC and code writing groups• Analyse private wire agreements, taking into account the benefits and risks

associated with these arrangements

Case studiesReview of embedded benefitsThis work was commissioned by a trade association to review the cost-reflectiveness of embedded benefits following the recent increases in their value and forecasts of further increases. This included analysis of the Triad benefit and how the methodology for calculating Triads could change in the upcoming Ofgem review.

Implementation of locational transmission lossesCornwall Insight undertook an impact assessment of the introduction of locational transmission losses for a portfolio of generation sites around GB. This enabled the client to assess the impact on their business plan and assisted in developing future cashflow forecasts.

Embedded benefits modellingCornwall Insight was commissioned by a large-scale independent utility to develop a model to estimate embedded benefits over a 10-year period on a site-specific basis. The modelling took account of different potential policy and regulatory direction on embedded benefits and provided scenarios of possible outcomes.

The long established principles that underpin network charging are changing to ensure they are fit for purpose and send the correct signals to the market. There are multiple and complex workstreams underway. Cornwall Insight ensures it is at the forefront of the debate so we can provide the most up to date and accurate advice to our clients.

Specialist areas: network charging, routes to market for power, regulation, governance and investment appraisals. Andy supports clients in responding to new regulatory regimes and evolving market conditions. At Cornwall Insight, Andy has:

• Led the development of a report focusing on heat networks for BEIS• Supported the development of a range of reports on embedded benefits for the ADE• Supported on the commercial due diligence of a portfolio of gas generators

Andy has 17 years’ experience in the sector, and previously worked at Electricity North West and First Hydro.

Andy Pace, Associate Consultant 01603 604413 a.pace@cornwall-insight.com

2322

Our specialisms

Interconnected markets

What we do• Interconnector flows and analysis• Energy market modelling• Trading arrangements• Acquisition, consolidation and due diligence• Supplier market entry• Regulatory and policy analysis• Investment appraisal• Strategic planning and business processes• Legislative and licencing requirements• European policy and regulation developments• Network charging arrangements• Trading and hedging support• Economic and financial modelling• Ongoing market intelligence support and insight• Flexible revenue analysis

Case studiesIrish power purchase agreement support and de-minimis benefitsCornwall Insight was asked to support a client with analysis of changes to the market structure on existing Power Purchase Agreement and future options. This also included analysis of the potential loss of net metering benefits for small scale generation.

Irish retail market analysisCornwall Insight published the Review of Effectiveness of Competition in the Northern Irish Retail Market in 2010. This was followed by a subsequent report, published in December 2014 that set out regulatory implications of potential price interventions.

I-SEM advisory supportCornwall Insight was asked to support and existing Irish market participant to understand the changes from SEM to I-SEM to understand the new trading and settlement arrangements and how they would impact on the clients' assets.

Despite the uncertainty surrounding the future of the UK in a post Brexit world, our energy markets will become more physically interconnected with our neighbours. Our experts can help you understand the commercial and market arrangements affecting interconnectors and the markets we connect to.

Specialist areas: balancing and settlement, regulation, policy, embedded benefits, Capacity Market, CfDs, losses and the generation market. Tom has been involved in numerous projects ranging from strategy development to transactional support. At Cornwall Insight, Tom has:

• Been on the BSC Panel since 2016• Led the development of an energy credit and collateral report for the government• Supported on the commercial due diligence of a portfolio of gas generators

Tom Edwards, Senior Consultant 01603 604411 t.edwards@cornwall-insight.com

2524

Supplier compliance assessments

What we do• Supply licence compliance and customer-facing industry code obligations• Assessment of customer facing documentation• Review of internal business process compliance• Support with broader obligations• Investigation advice and assistance• Licence exemption analysis and verification• Comparisons between supply market averages and best practice• Support understanding of industry guidance and voluntary codes of practice

Case studiesFull compliance assessmentCornwall Insight undertook a full assessment of an independent domestic supplier’s compliance with their obligations. This took the form of a detailed review of documentation and interviews with key personnel to determine their internal processes. The findings of this report were split into non-compliances and recommendations for best practice.

Non-domestic advanced metering obligationsCornwall Insight was commissioned by a large independent business supplier to conduct an assessment of its processes and steps taken to comply with its obligations to install advanced meters for profile classes 5-8. The assessment approach focused on the threshold needed to meet the all reasonable steps requirement and internal processes to ensure due management oversight of the programme.

Support for supplier under investigationCornwall Insight provided advice and support for an independent domestic supplier with an ongoing Ofgem investigation into its compliance. This included support with responses to, and meetings with the regulator, comparisons with general market practice, and undertaking an independent assessment of their compliance position.

Our specialisms

Cornwall Insight’s market leading compliance service not only helps suppliers ensure they are delivering good customer outcomes, but provides insight and assurance as the regulatory framework moves to a principles-based footing.

Specialist areas: regulation, retail market entry, retail market competition, and governance. Adam works with leading energy companies on issues relating to regulation, market reform, risk management, individual transactions and investment strategy. At Cornwall Insight, Adam has:

• Advised a major energy supplier on compliance with their licence and obligations• Supported a major local authority through retail market entry• Driven a major commercial due diligence project for an international investor

Adam Boorman, Consultant 01603 604417 a.boorman@cornwall-insight.com

2726

What our clients say

“Cornwall Insight undertook a research and analysis assignment on behalf of RES to explore PPA options and strategies for its generation and storage assets. I would highly recommend Cornwall Insight for its depth of knowledge and insights in the UK electricity sector”

– RES

“Cornwall Insight's consultants delivered valuable, precise and punctual support to our projects. Cornwall Insight's in-depth knowledge of the energy regulatory framework, power markets, analytical insight and balancing markets expertise proved critical for the success of our projects.”

– Bluefield LLP

“The service provided by Cornwall Insight has been excellent throughout this project. Their project delivery programme was well thought out and was delivered on time with professionalism and attention to detail. The team have worked closely with BEIS officers and industry experts in the development of the work and the guidance notes have exceeded expectations.”

– Department for Business, Energy & Industrial Strategy

www.cornwall-insight.com

28

www.cornwall-insight.com

Cornwall Insight, 2 Millennium Plain, Norwich, Norfolk, NR2 1TFTelephone: 01603 604400Email: enquiries@cornwall-insight.com