Our European power model uses a third-party optimization platform to simultaneously build plant stacks for each market and optimize prices and flows (within assumed transmission constraints) across borders to derive a final generation and price forecast per market.
The plant stacks incorporate our view of plant operational to 2050, with a bottom-up view of closures, new build and renewable capacity growth, alongside assumptions on availability and dispatch cost.
New build decisions are based on a combination of factors. We use a separate in-house capacity model to inform our view of new build based on project build and run costs, testing a range of scenarios with specific build constraints to cover different policy and behavioral cases. But with many new build decisions driven directly by external revenue or market intervention, our final capacity view also incorporates decisions based on national policy and available subsidies, as well as technical feasibility.
Interconnector build out between the EU10 zones is based largely on planned projects for the near-term (to 2030) and after that is driven by breakout spreads between the markets alongside an assessment of technical feasibility.
Our power demand forecast makes assumptions on the growth of each conventional demand component (residential, industrial and commercial) as well as layering in incremental demand from key growth areas, such as heat pumps, electrolyzers, EVs and data centers. Where appropriate, these additional demand elements are modelled to be able to flex in response to market length and price.
