PRACTICE AREA | Market Modelling

Castalia has built and maintains proprietary models to simulate power markets and other competitive trading environments.

Castalia develops tools to help clients better understand and respond to market dynamics. Our skills in market modelling include:

  • Power market modelling: We develop and apply models of wholesale power markets that generate realistic price forecasts and capture unique features such as market power, tacit collusion, plant ramp-rates and unit commitment constraints as well as transmission constraints and losses node-by-node. Castalia maintains proprietary power market models for New Zealand, Australia and the Philippines
  • Simulating competitive markets: We model complex interactions between market participants including the effects of sunk costs, regulation, and decision-making under uncertainty. We have done this in a range of markets, including emissions permits, transport, commodity trade and payment systems.
We use our skills in market modelling to assist our clients with:
  • Asset valuation and credit appraisal in competitive power markets and other markets relying on price path forecasts
  • Developing commercial strategies to respond to evolving market conditions, manage risk, and maximise company value
  • Antitrust issues that may impede corporate strategy or reduce public welfare.

Read a brief description of Castalia’s approach to modelling competitive power markets.