European power price forecasting: What sits behind the numbers

A structured view of how power price assumptions are constructed, stress-tested, and validated for investment, financing, and operational decision-making.

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Power price forecasts increasingly sit at the centre of investment cases, financing structures, and operational strategies. At the same time, market conditions are evolving rapidly, with renewable penetration, system constraints, and price volatility introducing dynamics that many traditional forecasting approaches struggle to capture.

For developers and operators, this raises questions around how well forecasts reflect system behaviour in practice. For lenders and investors, it raises a related question: how robust and defensible the underlying assumptions are.

This explainer sets out how power price dynamics are modelled, calibrated to observed market behaviour, and validated across scenarios, providing a transparent view of the assumptions that underpin revenue and risk assessments.