Backtest: how accurate were Montel’s European power price scenarios?
Long-term power price scenarios out to 2060 are an established basis for strategic and investment decisions in power markets. Naturally, that raises the question of how the quality and reliability of such scenarios can be assessed. One obvious approach is backtesting: comparing historical scenarios with the power prices that actually materialised.
The idea is sound. But especially over short time horizons, such comparisons can also lead to misleading conclusions. This article shows how Montel’s European power price scenarios largely bracketed realised prices, with a few outliers during unexpected geopolitical shocks.
