Fundamentals Model

Our NEM forecast is a 5-minute granularity, substate zonal model up to 2050. The forecast models demand, generation, constraints and ultimately prices at a 5-minute settlement period level, which in turn are used as inputs to our battery dispatch model.

The model runs off assumptions of demand, generation capacities, storage capacities, bidding behaviour, transmission capacities, and outages. We have rigorously tuned our fundamentals model against historical prices to accurately reflect actual price-setting behaviour. We specifically focus on properly modelling periods of volatility, as those periods are especially important to storage revenues.

The central pieces of our fundamental price model are the sub-state modelling and 5-minutely price granularity. Both of these are critical in modelling volatility and battery dispatch.

Substate-level modelling

To reflect regional dynamics within the NEM, we model at the substate level and consider transmission limits between substates. We divide the five NEM states into nine distinct regions, based on ISP Subregions:

• North, Central, and South Queensland

• North, Central, and South New South Wales

• Victoria

• South Australia

• Tasmania

  

5-minutely pricing

The model runs at 5-minutely granularity to build a full 5-minute time series of energy and FCAS prices through to the end of the model. Modelling at 5-minute granularity is critical to capturing some of the main drivers of price volatility within the NEM, as well as maximising the value that battery energy storage can capture from this.

What are the core inputs?

The model uses a range of inputs, primarily Modo Energy’s independently developed market outlook. This is informed by other sources, including data from NEMWEB, the 2024 AEMO Integrated System Plan (ISP), and ISP updates from the Draft 2025 Stage 2 Inputs and Assumptions. This outlook is grounded in rigorous market research and informed by deep industry expertise, providing a nuanced view of the future electricity market and capacity landscape. Find out more information by heading to the sub-page for each section.