Trace revenue formation
Separate existing contracts, market transactions, applicable settlement mechanisms and other verified income. Check eligibility, duration, calculation definitions and the settlement counterparty for each item.
PRACTICE / STRATEGY
Market-based investment and project value.
Evaluate revenue sources, market exposure and operating capability together.
Methodology: The ZHICE Scenario-led Strategy MethodTHE REAL CHALLENGE
Define the problem first.
In a market-based environment, identical installed capacity can produce different generation profiles, trading opportunities and settlement outcomes. Resource conditions, system constraints, commercial arrangements and operating capability jointly determine project value; an average power price or static utilisation assumption cannot fully explain the differences. ZHICE connects project appraisal with operating mechanisms, working back from revenue formation to test investment assumptions. We distinguish value supported by contracts or rules from value that still depends on capability development or external conditions. The objective is a traceable, reviewable basis for enterprise decisions.
BEYOND THE SYMPTOMSLook beyond symptoms.
Look beyond symptoms.
Understand the business logic.
Market-based project appraisal requires revisiting assumptions through the actual process of earning revenue. ZHICE examines resource conditions, operating arrangements, generation characteristics, contracts and settlement to establish whether modelled benefits have a viable path to realisation. Technical capability, market-participation conditions and team readiness belong in the same analytical picture. An equipment feature does not mean the business has earned corresponding income; the existence of a mechanism does not mean every project can use identical parameters and settlement terms at every stage.
Investment recommendations state both the conditions under which a plan works and how it could fail. ZHICE examines combinations of critical variables through scenarios, separating contract-backed revenue from income dependent on market conditions or new capabilities, and testing financial and operational resilience. Development pace and partnership options are compared on that basis, with prerequisites for investment recorded in decision papers. After commissioning, actual results are reviewed against the original assumptions so that post-project evaluation improves subsequent investment judgements and operational readiness.
A TOOL FOR THE WORKING SESSION
Turn diagnosis into verifiable questions.
From appraisal assumptions to achievable revenue
Swipe to explore the complete table
| Review stage | Evidence required | Analytical approach | Decision informed |
|---|---|---|---|
| Revenue eligibility and settlement | Applicable rules, contracts, participation conditions, settlement cycles and specific obligations. | Match each item to modelled revenue, distinguishing confirmed conditions, conditional arrangements and unverified assumptions. | Determine revenue suitable for the baseline and matters to resolve before the decision. |
| Operating and output constraints | Resource data, output records, connection conditions, maintenance arrangements and equipment operating limits. | Check consistency between operating conditions, prices, contracts and the revenue model, identifying invalid simplifications. | Revise operating assumptions and specify conditions the technical or operating solution must satisfy. |
| Operating capability and cost | Roles, processes and actual readiness in trading, forecasting, maintenance, data and settlement. | Verify the capabilities needed to realise income and include additional staff and systems costs. | Define commissioning-readiness tasks and budgets, and identify activities whose prerequisites are not yet met. |
| Scenarios and flexibility | Cash requirements under different variable combinations and options for phasing, partnership or exit. | Compare revenue exposure and irreversible commitments, checking funding and action flexibility when assumptions fail. | Set investment pace, decision prerequisites and critical assumptions for post-investment monitoring. |
A method for enterprise project appraisal, not a return assessment for any particular investment. Applicable rules require project-specific verification.
Four checks before the engagement begins
01Does every modelled revenue item have verifiable eligibility and a route to earning and settlement?
02Are price and output assumptions consistent, and do averages conceal exposure during critical periods?
03Are trading and operating capability costs included in total investment, with development responsibilities assigned?
04If important revenue conditions cannot be achieved, does the business retain executable funding and operating arrangements?
HOW WE WORK
From diagnosis to implementation.
Three connected levels form the working approach. Select a stage to explore the detail.
Verify operating constraints
Include generation profiles, grid connection conditions, maintenance plans, storage degradation and operating arrangements. Technical capability alone does not establish that revenue can be earned.
Assess operating readiness
Verify trading staff, forecasting capability, data quality, risk authorisation and settlement reconciliation. Identify operational investment still required after commissioning.
Build scenario appraisals
Examine the combined effects of prices, output and costs. Retain ranges and source references for uncertain variables instead of allowing one precise result to conceal uncertainty.
Compare development sequences
Assess capital employed and flexibility under full construction, phased delivery and joint development. Explain both the value of waiting for information and the cost of missed opportunities.
Define post-investment requirements
Translate assumptions into operating measures, trading permissions and review responsibilities. Capabilities required to earn the forecast income belong in the project budget and commissioning-readiness plan.
Set reviews of increasing depth at initiation, approval and pre-commissioning. As irreversible commitments approach, replace early assumptions with contracts, measured data and confirmed conditions.
Bring investment, production, commercial and finance teams together to review the revenue chain. Record disagreements and unresolved issues, and attach unverified critical conditions to the decision papers.
After commissioning, track actual output, settlement and costs against the original assumptions. Use post-investment reviews to improve parameters and operational readiness for subsequent projects.
TANGIBLE OUTPUTS
Deliverables designed for
real work.
Agree depth, data conditions and acceptance criteria at initiation. The engagement scope follows the tasks confirmed by both parties.
Project value-driver tree
Revenue and cost assumption register
Scenario and sensitivity assessment
Pre- and post-investment integration plan
ILLUSTRATIVE SCENARIO
Reassessing wind and solar investment under market pricing
Illustrative scenarioA renewable energy business plans additional regional projects using an appraisal based on fixed prices and average output. This example illustrates the method and makes no judgement about the returns of a particular project.
- 01
Identify applicable market and settlement conditions, treating distinct revenue sources separately.
- 02
Develop time-specific output and price scenarios to expose risks that averages may conceal.
- 03
Include the costs of forecasting, trading, maintenance and settlement capabilities in the investment plan.
- 04
Specify conditions to resolve before investment and assumptions to continue testing after commissioning.
BOARDROOM QUESTIONS
Focus the discussion on these choices.
01Does each revenue item have a verifiable route to formation and settlement?
02Can the business absorb the funding and operational pressures under downside scenarios?
03Are arrangements in place for the trading and maintenance capabilities on which returns depend?
RESEARCH FOUNDATIONS
Research brought into
consulting practice.
We translate management research and technological advances into working methods for energy businesses. The frameworks below are ZHICE's synthesis of the research and industry questions.
International Energy Agency (IEA)World Energy Outlook 2025 · 2025-11-12
Application in the ZHICE approachUses multiple-scenario analysis to distinguish how policy, market and technology changes affect energy businesses.
Scope and limitationsScenarios explore possible pathways rather than certain forecasts. Global scenarios do not replace enterprise or regional project appraisals.
Read the original researchPrice Department, National Development and Reform CommissionNDRC and NEA deepen market-based reform of renewable electricity tariffs · 2025-02-09
Application in the ZHICE approachUses renewable market pricing and differentiated settlement mechanisms as industry context, bringing market exposure, trading and settlement capabilities into strategy and investment analysis.
Scope and limitationsReferences the official policy interpretation. Project applicability still requires verification against current regional rules and actual project conditions.
Read the original researchOUR PRACTICE
Explore the critical questions.
Each practice examines diagnosis, solution design, implementation and delivery requirements in detail.
01 / STRATEGY
Energy transition and portfolio strategy
Establish an explicit capital allocation logic across existing assets and new growth.
Diagnosis · Design · ImplementationExplore this practice02 / STRATEGY
Market-based investment and project value
Evaluate revenue sources, market exposure and operating capability together.
Diagnosis · Design · ImplementationExplore this practice03 / STRATEGY
New businesses and business-model design
Start with needs customers will pay to address, then design growth that can be delivered and repeated.
Diagnosis · Design · ImplementationExplore this practiceSTART WITH A DECISION
Start with a decision.
Define the work around it.
Discuss the choices, constraints and evidence needed, then agree the engagement scope and work programme together.