Market Research

Case Study: #2 Market Research

Background: The Electricity Generating Public Company Limited wished to bid on the sale of a 49% stake in an 1800 MW CCGT in South Korea and needed an adviser to forecast power market prices and advise on issues related to LNG supply agreements and a terminal use agreement.

Orchid's Role:

  • Orchid was engaged in 2018 to provide a detailed analysis of how the Korean power and gas markets function, run a power market simulation to forecast power prices and act as adviser on all issues related to LNG value chain.
  • The first step was providing client with an overview market report explaining in detail how the Korean power and gas markets operate, identifying risks and looking at evolution in market regulation and policies.
  • The second step was due diligence on all commercial agreements related to the project and production of a red flag report.
  • The third step was running a market simulation and developing the analysis in report form. We ran ten cases in total.
  • Finally, we advised client on issues related to LNG market risk, and provided input on mitigating risk in the transaction documents.

Orchid's Deliverables:

  • Price forecasts for LNG and power in South Korea through 2046
  • Base case plus nine sensitivities
  • Full reporting on the market as well as analysis of simulation result
  • Risk analysis and mitigation strategies