The document discusses decision support methods for energy auctions and risk in the new Brazilian electricity sector regime. It proposes a simulation model to optimize energy purchasing costs for distributors. The model integrates an energy demand forecasting model with simulations of the settlement price (PLD) using hydro dispatch optimization software. It also simulates different percentages of estimated load purchased each year to minimize total costs over multiple years amid demand and PLD uncertainties.
Portfolio Management: An Electric Retailer's PerspectiveEric Meerdink
This document summarizes Hess Energy Marketing's perspective on portfolio management for electric retailers. It discusses the types of risks electric suppliers face including market price risk, volumetric risk, shaping risk, and migration risk. It emphasizes the importance of using quantitative risk measures like Gross Margin at Risk (GM@R) and stress testing to evaluate risk. Specific hedging strategies are discussed including using options to hedge volumetric "swing" risk and weather derivatives to hedge the risk of under-collecting fixed costs due to variation in weather.
Modeling and Hedging the Risk in Retail Load ContractsEric Meerdink
Modeling and Hedging the Risk in Retail Load Contracts discusses volumetric or "swing" risk in full requirements load following contracts for electricity. Swing risk is the cash flow risk from deviations in delivered load volumes from expected levels that are positively correlated with market prices. The document outlines how to estimate the expected cost of serving load including an expected "shaping factor" cost, describes delta hedging price risk but remaining exposed to swing risk, and proposes using options to construct a "gamma hedge" to manage swing risk. Regression analysis is used to estimate the relationship between historic load and price in order to model the gamma exposure and design an optimal options hedge.
Saturn Users Conference 2012: Portfolio Hedging and Optimization An Electric ...Eric Meerdink
Hess Corporation is an integrated energy company involved in exploration, production, refining, marketing and retail sales of energy products. It markets electricity, natural gas and fuel oil to commercial, industrial and utility customers on the East Coast. Hess uses financial hedging to manage risks from changes in energy market prices and customer usage. It seeks portfolio optimization tools to improve hedging strategies, evaluate risks more precisely and provide more competitive pricing. Generation assets can potentially reduce risks and costs when integrated into retail load portfolios. Consistent valuation across departments and businesses is also desired.
Unified Energy Services provides a unified approach to energy procurement and load management through a holistic energy management process. They manage all aspects of the energy process from information acquisition and supplier selection to contract management and implementation. Their process mapping ensures efficiency and accountability at each step. Case studies demonstrate savings of over 25% for commercial real estate customers such as Thompson National Properties, saving over $1.2 million annually across several properties in Texas alone.
This document provides an overview of key concepts related to welfare and elasticity in economics. It discusses consumer surplus and producer surplus, how they are measured as the area between demand/supply curves and price lines. It then covers the elasticity of demand, including own price elasticity and how it is calculated, as well as factors that influence elasticity. The document also discusses how elasticity impacts total revenue and explores cross price elasticity. Finally, it briefly introduces the concept of price elasticity of supply.
Cash Bonus vs. Rebate, Traditional Economics vs. Behavioral EconomicsLim Kang Ning
Plan A involves giving consumers a cash bonus to spend freely, while Plan B provides a rebate on electrical goods. Traditional economics assumes that increased consumption leads to higher well-being, but behavioral economics challenges this in several ways. Consumer preferences depend on reference points and adaptation, not just income levels. People also consider fairness over self-interest at times and misjudge probabilities contrary to rational assumptions. Both plans could stimulate spending, though cash bonuses are more flexible while rebates target specific goods not all consumers want.
This chapter discusses the analysis of competitive markets and evaluating the effects of government policies. It covers topics such as consumer and producer surplus, price controls, minimum prices, price supports, production quotas, and taxes/subsidies. The key concepts are how these policies impact the gains and losses to consumers and producers through changes in surplus, and how this relates to the efficiency and potential deadweight loss in competitive markets when the government intervenes.
SUMMARY
1) The document discusses market design options for natural gas transportation networks.
2) First, a decision must be made on whether network services are defined through bilateral contracts between owners and users or through guidelines set by a regulator, as is done in the EU and Australia.
3) Second, given a regulated transmission system operator (TSO), another decision is whether network services are allocated explicitly through auctions or implicitly through bundled gas and transmission prices, as seen in the EU and Australia respectively.
Portfolio Management: An Electric Retailer's PerspectiveEric Meerdink
This document summarizes Hess Energy Marketing's perspective on portfolio management for electric retailers. It discusses the types of risks electric suppliers face including market price risk, volumetric risk, shaping risk, and migration risk. It emphasizes the importance of using quantitative risk measures like Gross Margin at Risk (GM@R) and stress testing to evaluate risk. Specific hedging strategies are discussed including using options to hedge volumetric "swing" risk and weather derivatives to hedge the risk of under-collecting fixed costs due to variation in weather.
Modeling and Hedging the Risk in Retail Load ContractsEric Meerdink
Modeling and Hedging the Risk in Retail Load Contracts discusses volumetric or "swing" risk in full requirements load following contracts for electricity. Swing risk is the cash flow risk from deviations in delivered load volumes from expected levels that are positively correlated with market prices. The document outlines how to estimate the expected cost of serving load including an expected "shaping factor" cost, describes delta hedging price risk but remaining exposed to swing risk, and proposes using options to construct a "gamma hedge" to manage swing risk. Regression analysis is used to estimate the relationship between historic load and price in order to model the gamma exposure and design an optimal options hedge.
Saturn Users Conference 2012: Portfolio Hedging and Optimization An Electric ...Eric Meerdink
Hess Corporation is an integrated energy company involved in exploration, production, refining, marketing and retail sales of energy products. It markets electricity, natural gas and fuel oil to commercial, industrial and utility customers on the East Coast. Hess uses financial hedging to manage risks from changes in energy market prices and customer usage. It seeks portfolio optimization tools to improve hedging strategies, evaluate risks more precisely and provide more competitive pricing. Generation assets can potentially reduce risks and costs when integrated into retail load portfolios. Consistent valuation across departments and businesses is also desired.
Unified Energy Services provides a unified approach to energy procurement and load management through a holistic energy management process. They manage all aspects of the energy process from information acquisition and supplier selection to contract management and implementation. Their process mapping ensures efficiency and accountability at each step. Case studies demonstrate savings of over 25% for commercial real estate customers such as Thompson National Properties, saving over $1.2 million annually across several properties in Texas alone.
This document provides an overview of key concepts related to welfare and elasticity in economics. It discusses consumer surplus and producer surplus, how they are measured as the area between demand/supply curves and price lines. It then covers the elasticity of demand, including own price elasticity and how it is calculated, as well as factors that influence elasticity. The document also discusses how elasticity impacts total revenue and explores cross price elasticity. Finally, it briefly introduces the concept of price elasticity of supply.
Cash Bonus vs. Rebate, Traditional Economics vs. Behavioral EconomicsLim Kang Ning
Plan A involves giving consumers a cash bonus to spend freely, while Plan B provides a rebate on electrical goods. Traditional economics assumes that increased consumption leads to higher well-being, but behavioral economics challenges this in several ways. Consumer preferences depend on reference points and adaptation, not just income levels. People also consider fairness over self-interest at times and misjudge probabilities contrary to rational assumptions. Both plans could stimulate spending, though cash bonuses are more flexible while rebates target specific goods not all consumers want.
This chapter discusses the analysis of competitive markets and evaluating the effects of government policies. It covers topics such as consumer and producer surplus, price controls, minimum prices, price supports, production quotas, and taxes/subsidies. The key concepts are how these policies impact the gains and losses to consumers and producers through changes in surplus, and how this relates to the efficiency and potential deadweight loss in competitive markets when the government intervenes.
SUMMARY
1) The document discusses market design options for natural gas transportation networks.
2) First, a decision must be made on whether network services are defined through bilateral contracts between owners and users or through guidelines set by a regulator, as is done in the EU and Australia.
3) Second, given a regulated transmission system operator (TSO), another decision is whether network services are allocated explicitly through auctions or implicitly through bundled gas and transmission prices, as seen in the EU and Australia respectively.
O documento discute a modelagem da demanda por revistas no Brasil com o objetivo de fornecer previsões precisas. Ele descreve as características do mercado de revistas no Brasil, as séries temporais de vendas disponíveis, e os modelos estatísticos usados para prever a demanda, incluindo regressão dinâmica e modelos bayesianos. O documento também discute os desafios em prever a demanda para revistas com periodicidade quinzenal devido às frequentes revisões nos dados.
Este documento discute o modelo de análise envoltória de dados (DEA) utilizado pela Agência Nacional de Energia Elétrica (ANEEL) para calcular os custos operacionais eficientes das empresas de transmissão de energia elétrica no Brasil. O autor propõe uma adaptação ao modelo DEA da ANEEL, considerando os níveis de tensão das linhas de transmissão e restrições aos multiplicadores. Os resultados do modelo proposto são comparados com o modelo original da ANEEL.
Este documento analisa os riscos enfrentados pelas distribuidoras de energia elétrica no Brasil sob o novo modelo regulatório, no qual o governo centraliza as aquisições de energia. As distribuidoras precisam estimar com precisão a demanda de suas áreas para os próximos cinco anos e são punidas financeiramente por erros de estimativa. A pesquisa simula os custos de contratação para uma distribuidora hipotética considerando variáveis aleatórias e conclui que o sistema é frágil, pois pequenas mudanças nos dados
O documento apresenta um resumo sobre estatística aplicada à logística. Aborda conceitos como população, amostra, variáveis, estatística descritiva e seus métodos de síntese de dados qualitativos e quantitativos. Tem como objetivo fornecer uma revisão sobre esses tópicos para aplicação em modelos de otimização logística.
1. O documento descreve modelos de regressão com variáveis binárias, explicando como especificar corretamente variáveis qualitativas com m categorias para evitar colinearidade.
2. É apresentado um exemplo usando dados eleitorais do Rio de Janeiro para ilustrar como interpretar os coeficientes em modelos com e sem termo constante.
3. Os resultados mostram que a região da cidade influencia os percentuais de votos brancos e nulos, sendo menores nas zonas Sul e Norte.
This document summarizes a presentation on short term demand forecasting for the Brazilian power system. It provides an overview of the Brazilian power system, including its history of government control and ongoing privatization process. It then discusses short term load forecasting and the importance of accounting for temperature effects and holidays. The presented work uses a version of Holt-Winters exponential smoothing to generate short term forecasts and plans to incorporate temperature data to improve results.
Este capítulo discute a análise de regressão múltipla e a inferência estatística. Apresenta os testes t e intervalos de confiança para os coeficientes de regressão e discute a importância da hipótese de normalidade dos resíduos para a aplicação correta destes testes. Também introduz o teste de Jarque-Bera para avaliar a normalidade dos resíduos.
1) O documento discute dados em painel, que combinam séries temporais e seção cruzada para várias unidades ao longo do tempo. 2) Apresenta dois modelos comuns para análise de dados em painel: modelo de efeitos fixos e modelo de efeitos aleatórios. 3) Usa como exemplo dados de investimento de 4 empresas entre 1935-1954 para ilustrar a análise em painel no software Stata.
Este documento apresenta um tutorial sobre econometria e o uso do software Gretl, com o objetivo de ensinar conceitos básicos de econometria e análise de dados econômicos. O documento introduz o que é econometria, características dos dados econômicos e o software Gretl, e fornece exemplos passo a passo de estatística descritiva, correlação, regressão linear simples e múltipla utilizando o Gretl.
Este capítulo discute o modelo de regressão múltipla com duas variáveis explicativas e apresenta os
estimadores de mínimos quadrados ordinários. Os coeficientes parciais de regressão medem o efeito
de cada variável explicativa sobre a variável dependente quando o efeito da outra variável é
mantido constante. Os estimadores MQO são obtidos resolvendo um sistema de equações que
envolve a matriz dos dados e os vetores de parâmetros e erros. A variância dos estimadores
depende de um parâmetro que mede a variância dos
The document discusses residential electricity consumption in Brazil following economic reforms in 1994. It summarizes that inflation fell dramatically, increasing incomes especially for the poor. Combined with increasing electronics imports, this caused unprecedented growth in residential electricity consumption. A new survey is being conducted to create an updated residential consumer profile across Brazil to aid planning and demand side management policies, as consumption growth has strained energy supply. Cluster analysis is being used to group municipalities for a stratified sampling approach in the surveys.
O documento discute os modelos de dependência espacial em econometria. Apresenta os principais conceitos da econometria espacial, como matrizes de pesos espaciais, operador de defasagem espacial, autocorrelação espacial e testes para sua detecção. Também explica os dois modelos mais usados - modelo de defasagem espacial e modelo de erro espacial - e como especificar e testar a presença de dependência espacial nos dados.
A hybrid neural network and neuro-fuzzy system model was developed to forecast weekly electricity spot prices in Brazil. The model combines the forecasts from an artificial neural network with the original inputs in a neuro-fuzzy system to generate the final forecasts. Six models were created to specialize in forecast horizons of 1 to 6 weeks ahead. Various neural network structures were tested to select the best performing models. The hybrid approach aims to incorporate the advantages of both neural networks and neuro-fuzzy systems for improved forecasting performance.
Este documento fornece uma introdução ao ambiente R, abordando tópicos como a instalação e uso básico do R, pacotes disponíveis, objetos fundamentais como vetores e matrizes, programação em R incluindo funções e depuração, e manipulação e visualização de dados.
Steve Corneli, NRG Energy, Inc. - Speaker at the marcus evans Generation Summit 2012 held in San Antonio, TX, delivered his presentation entitled Clean Energy Trends – Costs, Policies and Initiatives
2012 Tutorial: Markets for Differentiated Electric Power ProductsSean Meyn
ACC 2012 Tutorial
http://accworkshop12.mit.edu
The talk will review the many services needed in today's grid, and those that will be more important in the future. It will also review recent competitive equilibrium theory for the highly dynamic markets that may emerge in tomorrow's grid. In particular, to combat volatility from increasing penetration of renewable energy resources, there will be greater need for regulation services at various time-scales. There is enormous potential to secure these ancillary services via demand response. However, there is an obsession today with the promotion of real time prices to incentivize demand response. All evidence strongly suggests that this is a bad idea: 1) In 2011, massive price swings in the real-time market generated anger in Texas and New Zealand 2) Our own research shows that this is to be expected: in a completive equilibrium real-time prices will reach the choke up price (which was recently estimated at 1/4 million dollars). With transmission constraints, our research concludes that prices can go much higher. 3) A recent EIA study shows that consumers are scared of smart meters - they do not trust utility companies to experiment with their meters, or their power bills. We must then ask, is there any motivation to focus on markets in a real-time setting? The speaker believes there is none. Explanations will be given, and alternative visions will be proposed.
The utility landscape is dynamic. Some pundits claim that traditional utility regulation is becoming obsolete. Others are calling for a complete overhaul of utility ratemaking as we know it; distributed energy resources, technology advancements and societal trends are changing the way utilities function. In such turbulent times, how can utilities manage their financials through rate structures? How can utilities bridge the span between the rate and regulatory frameworks of yesterday and tomorrow? One way to do so is to revisit the design of rate offerings available to all utility customers and to residential customers in particular.
O documento discute a modelagem da demanda por revistas no Brasil com o objetivo de fornecer previsões precisas. Ele descreve as características do mercado de revistas no Brasil, as séries temporais de vendas disponíveis, e os modelos estatísticos usados para prever a demanda, incluindo regressão dinâmica e modelos bayesianos. O documento também discute os desafios em prever a demanda para revistas com periodicidade quinzenal devido às frequentes revisões nos dados.
Este documento discute o modelo de análise envoltória de dados (DEA) utilizado pela Agência Nacional de Energia Elétrica (ANEEL) para calcular os custos operacionais eficientes das empresas de transmissão de energia elétrica no Brasil. O autor propõe uma adaptação ao modelo DEA da ANEEL, considerando os níveis de tensão das linhas de transmissão e restrições aos multiplicadores. Os resultados do modelo proposto são comparados com o modelo original da ANEEL.
Este documento analisa os riscos enfrentados pelas distribuidoras de energia elétrica no Brasil sob o novo modelo regulatório, no qual o governo centraliza as aquisições de energia. As distribuidoras precisam estimar com precisão a demanda de suas áreas para os próximos cinco anos e são punidas financeiramente por erros de estimativa. A pesquisa simula os custos de contratação para uma distribuidora hipotética considerando variáveis aleatórias e conclui que o sistema é frágil, pois pequenas mudanças nos dados
O documento apresenta um resumo sobre estatística aplicada à logística. Aborda conceitos como população, amostra, variáveis, estatística descritiva e seus métodos de síntese de dados qualitativos e quantitativos. Tem como objetivo fornecer uma revisão sobre esses tópicos para aplicação em modelos de otimização logística.
1. O documento descreve modelos de regressão com variáveis binárias, explicando como especificar corretamente variáveis qualitativas com m categorias para evitar colinearidade.
2. É apresentado um exemplo usando dados eleitorais do Rio de Janeiro para ilustrar como interpretar os coeficientes em modelos com e sem termo constante.
3. Os resultados mostram que a região da cidade influencia os percentuais de votos brancos e nulos, sendo menores nas zonas Sul e Norte.
This document summarizes a presentation on short term demand forecasting for the Brazilian power system. It provides an overview of the Brazilian power system, including its history of government control and ongoing privatization process. It then discusses short term load forecasting and the importance of accounting for temperature effects and holidays. The presented work uses a version of Holt-Winters exponential smoothing to generate short term forecasts and plans to incorporate temperature data to improve results.
Este capítulo discute a análise de regressão múltipla e a inferência estatística. Apresenta os testes t e intervalos de confiança para os coeficientes de regressão e discute a importância da hipótese de normalidade dos resíduos para a aplicação correta destes testes. Também introduz o teste de Jarque-Bera para avaliar a normalidade dos resíduos.
1) O documento discute dados em painel, que combinam séries temporais e seção cruzada para várias unidades ao longo do tempo. 2) Apresenta dois modelos comuns para análise de dados em painel: modelo de efeitos fixos e modelo de efeitos aleatórios. 3) Usa como exemplo dados de investimento de 4 empresas entre 1935-1954 para ilustrar a análise em painel no software Stata.
Este documento apresenta um tutorial sobre econometria e o uso do software Gretl, com o objetivo de ensinar conceitos básicos de econometria e análise de dados econômicos. O documento introduz o que é econometria, características dos dados econômicos e o software Gretl, e fornece exemplos passo a passo de estatística descritiva, correlação, regressão linear simples e múltipla utilizando o Gretl.
Este capítulo discute o modelo de regressão múltipla com duas variáveis explicativas e apresenta os
estimadores de mínimos quadrados ordinários. Os coeficientes parciais de regressão medem o efeito
de cada variável explicativa sobre a variável dependente quando o efeito da outra variável é
mantido constante. Os estimadores MQO são obtidos resolvendo um sistema de equações que
envolve a matriz dos dados e os vetores de parâmetros e erros. A variância dos estimadores
depende de um parâmetro que mede a variância dos
The document discusses residential electricity consumption in Brazil following economic reforms in 1994. It summarizes that inflation fell dramatically, increasing incomes especially for the poor. Combined with increasing electronics imports, this caused unprecedented growth in residential electricity consumption. A new survey is being conducted to create an updated residential consumer profile across Brazil to aid planning and demand side management policies, as consumption growth has strained energy supply. Cluster analysis is being used to group municipalities for a stratified sampling approach in the surveys.
O documento discute os modelos de dependência espacial em econometria. Apresenta os principais conceitos da econometria espacial, como matrizes de pesos espaciais, operador de defasagem espacial, autocorrelação espacial e testes para sua detecção. Também explica os dois modelos mais usados - modelo de defasagem espacial e modelo de erro espacial - e como especificar e testar a presença de dependência espacial nos dados.
A hybrid neural network and neuro-fuzzy system model was developed to forecast weekly electricity spot prices in Brazil. The model combines the forecasts from an artificial neural network with the original inputs in a neuro-fuzzy system to generate the final forecasts. Six models were created to specialize in forecast horizons of 1 to 6 weeks ahead. Various neural network structures were tested to select the best performing models. The hybrid approach aims to incorporate the advantages of both neural networks and neuro-fuzzy systems for improved forecasting performance.
Este documento fornece uma introdução ao ambiente R, abordando tópicos como a instalação e uso básico do R, pacotes disponíveis, objetos fundamentais como vetores e matrizes, programação em R incluindo funções e depuração, e manipulação e visualização de dados.
Steve Corneli, NRG Energy, Inc. - Speaker at the marcus evans Generation Summit 2012 held in San Antonio, TX, delivered his presentation entitled Clean Energy Trends – Costs, Policies and Initiatives
2012 Tutorial: Markets for Differentiated Electric Power ProductsSean Meyn
ACC 2012 Tutorial
http://accworkshop12.mit.edu
The talk will review the many services needed in today's grid, and those that will be more important in the future. It will also review recent competitive equilibrium theory for the highly dynamic markets that may emerge in tomorrow's grid. In particular, to combat volatility from increasing penetration of renewable energy resources, there will be greater need for regulation services at various time-scales. There is enormous potential to secure these ancillary services via demand response. However, there is an obsession today with the promotion of real time prices to incentivize demand response. All evidence strongly suggests that this is a bad idea: 1) In 2011, massive price swings in the real-time market generated anger in Texas and New Zealand 2) Our own research shows that this is to be expected: in a completive equilibrium real-time prices will reach the choke up price (which was recently estimated at 1/4 million dollars). With transmission constraints, our research concludes that prices can go much higher. 3) A recent EIA study shows that consumers are scared of smart meters - they do not trust utility companies to experiment with their meters, or their power bills. We must then ask, is there any motivation to focus on markets in a real-time setting? The speaker believes there is none. Explanations will be given, and alternative visions will be proposed.
The utility landscape is dynamic. Some pundits claim that traditional utility regulation is becoming obsolete. Others are calling for a complete overhaul of utility ratemaking as we know it; distributed energy resources, technology advancements and societal trends are changing the way utilities function. In such turbulent times, how can utilities manage their financials through rate structures? How can utilities bridge the span between the rate and regulatory frameworks of yesterday and tomorrow? One way to do so is to revisit the design of rate offerings available to all utility customers and to residential customers in particular.
Genetic algorithm based Different Re-dispatching Scheduling of Generator Unit...IDES Editor
Proper pricing of active power is an important issue
in deregulated power environment. This paper presents a
flexible formulation for determining short run marginal cost
of synchronous generators using genetic algorithm based
different re-dispatching scheduling considering economic load
dispatch as well as optimized loss condition. By integrating
genetic algorithm based solution, problem formulation became
easier. The solution obtained from this methodology is quite
encouraging and useful in the economic point of view and it
has been observed that for calculating short run marginal
cost, generator re-dispatching solution is better than classical
method solution. The proposed approach is efficient in the
real time application and allows for carrying out active power
pricing independently. The paper includes test result of IEEE
30 bus standard test system.
The document discusses the optimal bidding strategy in deregulated electricity markets. It proposes using a particle swarm optimization algorithm to determine the optimal bidding strategy for generators and large consumers. In a deregulated market, electricity generation, transmission, distribution, and retail sales are separated and opened to competition. This includes generating companies, large consumers who participate in demand bidding, and small consumers represented in aggregate form. The algorithm uses previous bidding data and a multi-round auction process to obtain the optimal bidding strategy, converging faster than Monte Carlo simulation.
Our article that is published in Metering International issue 3, september 2011. The article is about smart meters and new business model in the utilities sector.
Overview of rate setting & their role in smart gridbobprocter
This document discusses rate setting and the role of rates in the smart grid from an 80,000 foot view. It provides an overview of economic regulation of utilities, the goal of ensuring fair rates that approximate competitive results. It outlines the 5 steps of rate setting: determining prudent costs, revenue requirements, cost allocation, rate design, and setting rates. Rate design options including time-based rates are discussed, and why rate design is considered an element of the smart grid to better link costs and rates to manage costs and reduce peak usage.
This document discusses innovation in energy services and the role of energy service companies (ESCOs) in transforming and decentralizing cities. It covers: 1) Status reports on energy reduction goals and progress; 2) How new technologies provide new solutions and opportunities; 3) Examples of decentralized power generation; 4) The ESCO business model of energy service companies; and 5) An announcement of a new energy service from Self Energy. The presentation encourages greater adoption of energy efficiency measures in buildings to meet climate targets and lower energy costs. It also highlights the ESCO model and integrated energy contracts for a more convenient solution.
The project involves determining real time electricity charges incurred by the residential consumers. The smart grid integrated with residential PV systems was modeled in Simulink to determine demand response in dynamic pricing environment. Based on the load demand, electricity charges were calculated and compared with flat rate charges to highlight cost savings.
The document discusses the restructuring of power systems from monopolistic to deregulated markets. It explains that restructuring separates generation, transmission, distribution and supply functions. This creates new business opportunities and lower costs for consumers. Various restructuring models are presented including poolco, bilateral contracts and hybrid models. The poolco model uses a centralized market to set prices while bilateral contracts allow direct negotiations. The hybrid model combines features of the first two. An independent system operator maintains grid operations.
A national perspective on using rates to control power system costs (recommen...bobprocter
This document provides an overview of using time-differentiated electricity rates to control power system costs from a national perspective. It discusses how electricity pricing has resulted in consumption patterns that do not match production and delivery cost patterns, leading to increasing costs. Dynamic pricing is presented as a way to better align prices with underlying costs. The document covers definitions of dynamic pricing, related rate design issues, potential impacts on different customer groups, enabling technology needs, and transition challenges. It argues dynamic pricing could significantly reduce peak consumption and lower future electricity costs if designed and implemented properly while accounting for different stakeholder impacts.
This document summarizes an article that proposes an automatic demand response controller with a load shifting algorithm implemented using MATLAB software. The controller monitors generation capacity and customer demand to optimally schedule loads to reduce peak demand and stabilize the load curve. A mathematical model is presented that shifts loads in priority order from the lowest to highest load if total demand exceeds generation capacity. The model was tested on an 8 bus system in MATLAB and successfully stabilized the load curve to better manage power demand according to supply conditions.
This document discusses solar feed-in tariffs and renewable portfolio standards in Germany and California. It explains that feed-in tariffs set a fixed price that solar producers are paid for electricity, while renewable portfolio standards set renewable energy production quotas and let market prices be determined. Germany pioneered feed-in tariffs in 1991 and California established a renewable portfolio standard in 2002, requiring 20% renewable energy by 2017. Both policies have effectively increased solar power adoption.
This document discusses rate design pathways for electricity providers to establish fair utility rates for solar PV customers in a distributed energy age. It proposes an integrated cost recovery approach for utilities based on three interrelated pricing approaches: 1) Allowing utilities to recover their minimum necessary customer-related fixed costs through a fixed charge. 2) Classifying utility costs as demand, energy, or customer-related and ensuring solar customers pay their fair share of these costs. 3) Considering utility rate cases like We Energies' proposal to increase fixed charges for solar customers cautiously to avoid over-recovery of costs or discouraging solar adoption.
Market Based Criteria for Congestion Management and Transmission PricingIJERA Editor
Congestion Management is one of the major tasks performed by system operator to ensure the operation of transmission system within operating limits. In the emerging electric power market, the congestion management becomes extremely important and it can impose a barrier to the electricity trading. In the present paper, a concept of transmission congestion penalty factors is developed and implemented to control power overflows in transmission lines for congestion management. Here we presents a Re-dispatch methodology for cost of transmission network to its user. The transmission price computation considers the physical impact caused by the market agents in the transmission network. The paper includes case study for IEEE 5 bus power system.
The document discusses peer-to-peer (P2P) energy trading between households in a community microgrid. It proposes three market paradigms for P2P energy trading: bill sharing, mid-market rate, and an auction-based pricing strategy. It finds that with 30-50% of households having solar PV installations, P2P energy trading can reduce a community's total energy costs by around 30% due to diversity of energy demands being met locally. P2P energy trading provides opportunities for local energy generation and use within a community.
Supporting-green-electricity-lessons-learned-from-the-spanish-feed-in-tariff-...Gnera Energía y Tecnología
The Spanish economic support system for electricity from renewable energy sources has had a good reputation due to its good results in terms of number of new plants, installed megawatts, industrial development, etc. Nevertheless, in the last years we have assisted to major and sudden legislative changes motivated by different events that have put under discussion the system sustainability. After describing the main green electricity support systems available and the benefits of introducing renewable energies in the electricity market, this paper analyses the causes of the “boom and burst” of the Spanish support mechanisms and the main lessons learned.
//
Principales lecciones aprendidas del sistema de tarifas y primas a las energías renovables en España.
1. Highlights
We propose an energy demand forecasting
model integrated with ...
DECISION SUPPORT METHODS IN models to
ENERGY AUCTIONS simulate and optimize energy purchasing costs
and
Mônica Barros, D.Sc. reduce the penalties that the government
Marina Figueira de Mello, D.Sc. imposes on the energy retailers.
Reinaldo Castro Souza, PhD.
Bruno Dore Rodrigues, M.Sc. We present a resampling scheme to
evaluate the PLD (Settlement Price), one
Instituto de Energia - PUC-Rio
PUC- of the components of penalties in the
electricity market, which is stochastic and
Fortaleza, 30/08/2007
30/08/2007 heavily influenced by inflows.
monica@ele.puc-rio.br 2
The New Electric Sector Regime The New Electric Sector Regime
In the new regime, the regulator is in These decisions are risky for two
charge of auctioning new and existing
projects to supply the whole captive
main reasons:
market. i) auction prices differ (it has been
Distributors are only required to inform possible to buy energy for half the price
their forecasted demands five years in specific auctions);
ahead. They have to decide: ii) errors in demand forecasts are
First decision: How much to ask in each punished in an asymmetric fashion.
individual auction?
Second decision: How to access future demand
in each of the 60 months ahead?
monica@ele.puc-rio.br 3 monica@ele.puc-rio.br 4
2. The New Electric Sector Regime The New Electric Sector Regime
Distributors who demand a relatively high
The weighted average of the prices share of their needs in low price auctions
paid by the regulator for the total will have their profits increased.
energy bought from various
generators will be passed-through to Losses will come to those distributors who
prices. concentrate their demand in the high price
auctions.
Distributors will pay for their energy
in proportion to their declared Distributors are not truly free to allocate
demand in each auction. their demand amongst auctions because
the terms of the contracts being auctioned
monica@ele.puc-rio.br 5
may be incompatible with theirs needs. 6
monica@ele.puc-rio.br
PLD – Settlement Price Simulation
Demand Model
Model
The structure of the demand model is:
Variable Coefficient Standard Error T Statistic Significance
Hydroelectric energy is generally cheaper
Log(C_TOTAL[-1]) 0,772 0,077 10,085 100,0%
but hydro units are not always fully
dispatched since low water levels mean a
Log(PIB[-1]) 0,367 0,122 3,013 98,9%
Log(PR_ENERGIA) -0,189 0,053 -3,564 99,6%
supply risk.
Log(PR_GAS) 0,053 0,017 3,111 99,1%
RACION -0,132 0,022 -6,105 100,0%
Where:
C_total[-1] = consumption in the previous month
C_total[- The ISO ponders the present benefit of
PIB[-1] = GDP in the previous month
PIB[- cheap water use and the future benefits of
PR_ENERGIA = electricity price high level reservoirs, both measured by
PR_GAS = GLP price their opportunity cost in terms of fuel
RACION = dummy variable – rationing period savings in thermoelectric plants.
monica@ele.puc-rio.br 7 monica@ele.puc-rio.br 8
3. PLD – Settlement Price Simulation PLD – Settlement Price Simulation
Model Model
NEWAVE is the software used to optimize PLD – Settlement Prices are CMOs –
dispatch between hydro and thermal units. Marginal Costs of Operation in a limited
It also calculates monthly CMOs – range.
Marginal Costs of Operation, considering Currently in 2007, PLDs are restricted to
hydrological conditions, demand levels, the interval (R$ 17.59, R$ 534.50).
new plants, fuel prices and deficit costs. Penalties for demand over and
Monthly CMOs are further transformed underestimation use a yearly PLD which is
into weekly CMOs through the use of a weighted average of the monthly PLDs
another optimization software, DECOMP. prevailing in the twelve preceding months.
monica@ele.puc-rio.br 9 monica@ele.puc-rio.br 10
PLD – Settlement Price Simulation PLD – Settlement Price Simulation
Model Model
In this paper, we simulate yearly PLDs 3. Create 2000 realizations of average PLD
through the following process: series through:
w1CMOrestr1i + w2 CMOrestr2i + .... + w12 CMOrestr12,i
1. Estimation of monthly seasonal factors PLDi =
12
2. Estimation of Southeastern CMOs Where i = 2007, 2008, ..., 2011, and
through NEWAVE for 2007-2011 (we w1 is the seasonal factor for January (constant in all
used CCEE’s Feb. 2007 “deck”). In this years)
w2 is the seasonal February factor (constant in all
step, 2000 CMO series are generated for years)
each one of the 60 months ahead: CMOrestr = CMO restricted to the interval (17.59, (17.
534.50), i.e. each monthly CMO subjected to PLD
534.
Jan/2007, Feb/2007, Mar/2007, ...., restrictions. For simplicity, this interval was admitted
Dec/2011. to be the same until 2011.
monica@ele.puc-rio.br 11 monica@ele.puc-rio.br 12
4. PLD – Settlement Price Simulation PLD – Settlement Price Simulation
Model Model
4. The 2000 PLD series of 2007 (and also Thus, if in one simulation the k-th series is
sorted out from the 2000 CMO series, 2007
2000 of 2008, 2000 of 2009 and so average PLD will be calculated using this
on…) are resampled allowing the PLD series; the average 2008 PLD is also calculated
to be introduced as a random variable from the CMOs of this series and so on until
in the model. 2011.
This is very important to preserve the time
The resampling model described above dependency of CMOs the PLD NEWAVE
uses the SAME NEWAVE series simulation scheme.
throughout the period 2007-2011.
PLDs simulated for the period 2007-2011 are
2007-
highly variable as the next graphs show.
monica@ele.puc-rio.br 13 monica@ele.puc-rio.br 14
PLD – Settlement Price Simulation PLD – Settlement Price Simulation
Model Model
Simulated PLD – 2007 Simulated PLD – 2009
D istrib utio n fo r pld_m edio _2007/B 2 Statistics Values D istrib utio n fo r pld_m edio _2009/D 2 Statistics Values
X < = 17 .59
5%
X <= 90 .11
95 %
Minimum 17.59 X < = 23 .0 6
5%
X <= 52 0 .23
9 5%
Minimum 17.59
0 .0 8 5
Maximum 203.7 4 .5 Maximum 534.59
0 .0 7 M e a n = 34 .6 85 13 M e a n = 2 0 9.9 2 31
Mean 34.69
4 Mean 209.92
0 .0 6
Values in 10^ -3
3 .5
Std Dev 155.1
0 .0 5 Std Dev 27.27 3
0 .0 4
2 .5 Percentiles Values
Percentiles Values 2
0 .0 3 5% 23.06
5% 17.59 1 .5
0 .0 2 1 50% 169.37
0 .0 1
50% 22.13 0 .5
0
75% 318.38
0 75% 40.92 0 200 40 0 600 95% 520.23
0 55 11 0 16 5 220
95% 90.11
monica@ele.puc-rio.br 15 monica@ele.puc-rio.br 16
5. PLD – Settlement Price Simulation Simulation Model for Energy
Model Purchases
Simulated PLD – 2011 The proposed simulation model for
Distribution for pld_medio_2011/F2
Statistics Values the annual cost of energy purchases
is a function of 7 factors:
X <=31.88 X <=534.59
Minimum 17.59
5% 9 5%
7 Maximum 534.59
Percentage of the estimated load
M e a n = 260.4488 Mean 260.45
1.
6
Std Dev 176.74
Values in 10^ -3
5
4
Percentiles
5%
Values
31.88
purchased in a given year;
3
50% 218.66 2. Load forecast in MWh;
2 75% 437.3
1 95% 534.59 3. Standard deviation of the load forecast
0
0 200 400 600 in MWh;
4. Actual demand in MWh;
monica@ele.puc-rio.br 17 monica@ele.puc-rio.br 18
Simulation Model for Energy Simulation Model for Energy
Purchases Purchases
5. Reference Value (VR), in R$ per MWh;
MWh; The percentage of the estimated load
6. The distribution company’s energy purchased in each year is what we seek to
purchasing cost, commonly known as the optimize.
company’s “mix”, in R$ per MWh;
MWh; It represents the ideal purchasing amount in
7. The average annual settlement price (PLD), in each year, so that the total cost in the
R$ per MWh.
MWh. specified period is minimum.
In the simulation, this percentage was taken
The simulation model was implemented as a Uniform (0.95, 1.10) random variable.
in Excel using the add-in @Risk by That is, in each year, some value between
Palisade Corporation. Some of the inputs 95% and 110% of the forecasted demand can
of the model are random and others are be purchased.
deterministic.
monica@ele.puc-rio.br 19 monica@ele.puc-rio.br 20
6. Simulation Model for Energy Simulation Model for Energy
Purchases Purchases
The demand forecast is the value We propose a left truncated Normal
obtained from the time series model. distribution for this variable, at a point x0
It is considered fixed (deterministic) located below the mean of the original
in the simulation model, as well as its Normal distribution.
standard deviation.
The “actual” demand is a stochastic This forces the simulation to produce
input. In fact, nothing can be said higher values of the “actual” demand than
about it until it is observed (in the those that would be observed by
future). simulation from a (non-truncated) Normal.
monica@ele.puc-rio.br 21 monica@ele.puc-rio.br 22
Simulation Model for Energy Simulation Model for Energy
Purchases Purchases
Since penalties are asymmetric and The Reference Value is deterministic (R$
utilities are more severely penalized for 84.58/MWh), and fixed by the Brazilian
under-purchasing energy, this procedure regulator 2007.
(keeping all other factors constant) raises
the risks of under-purchasing energy in The company´s energy purchasing cost
any given year. (the “mix”) is also taken as deterministic,
and set at R$ 86.70/MWh.
Here we use as truncation point 95% of The average annual PLD is random and
the mean of the original Normal was simulated as previously described.
distribution.
monica@ele.puc-rio.br 23 monica@ele.puc-rio.br 24
7. Simulation Model for Energy Simulation Model for Energy
Purchases Purchases
The annual purchasing cost is This penalty occurs because the amount of
energy necessary to supply the actual load
comprised of four components: one is has to be purchased at price PLD.
the energy cost itself, and the other If the PLD is high, the acquisition cost
three are direct or indirect penalties. cannot be passed through to consumers,
The penalty due to non recovery of and the utility should be penalized with
this additional cost.
costs while under-purchasing energy
By construction, this penalty (F1) is always
is given by: qsub = amount underpurchased
nonnegative and implies an increased cost
(gap below 100% of actual
F = { PLD − min ( PLD, VR )}. ( qsub ) demand)
1
for the distributor.
PLD = settlement price
VR = reference value
monica@ele.puc-rio.br 25 monica@ele.puc-rio.br 26
Simulation Model for Energy Simulation Model for Energy
Purchases Purchases
The penalty for under-purchasing energy This is not a penalty in the literal sense,
is defined as: but an additional cost that cannot be
F2 = max ( PLD, VR ) . ( qsub ) passed to consumer’s tariffs.
Similarly to F1, F2 is also nonnegative and qover = amount of energy
F3 = (qover )(MIX − PLD )
purchased above 103% of the
always leads to increased costs to the . actual demand
distributors. MIX = utility’s average energy
purchasing cost
A third penalty occurs when the utility has
over-purchased energy above a level A cost reduction will happen whenever
considered “acceptable” by the regulator PLD exceeds the company’s average
(103% of the actual demand). purchasing cost.
monica@ele.puc-rio.br 27 monica@ele.puc-rio.br 28
8. Simulation Model for Energy Simulation Model for Energy
Purchases Purchases
F3 indicates a clear possibility of profits In the scenarios generated from the official data
instead of losses when a utility chooses to of February 2007, when a shortage is quite
probable in the coming years, these profit
over-purchase energy (above the 103% opportunities arise.
limit).
The total energy purchasing cost is:
Profits will occur in case PLD is high, C = F1 + F2 + F3 + MIX .q
which happens when energy shortages are In the simulation model, the quantity purchased
foreseen. is defined as: q = p.( D _ Actual )
This result may be considered to be rare,
since PLD historically remained at very low Where p is the percentage of energy purchased,
levels. supposed Uniform in the interval (0.95, 1.10) and
D_Actual is the “actual” demand, a truncated
actual”
Normal random variable.
variable.
monica@ele.puc-rio.br 29 monica@ele.puc-rio.br 30
Simulation Model for Energy Simulation Model for Energy
Purchases Purchases
Total Acquisition Cost – 2007 Total Acquisition Cost – 2009
Distribution for Custo 2007/M5 Distribution for Custo 2009/M7
X <=89 383596 8 X <=103 9363136 X <=9 40 16 60 16 X <=12 19 8 80 44 8
5% 95% 5% 9 5%
1.4 9
8 M ea n =
1.2 M e an = 1.06 54 03 E+0 9
Values in 10^ -9
9.5143 37E+08 7
6
Values in 10^ -8
1
5
0.8
4
0.6 3
2
0.4 1
0.2 0
0.7 0.95 1.2 1.45 1.7
0
0.85 0.95 1.05 1.15 Values in Billions
Values in Billions
monica@ele.puc-rio.br 31 monica@ele.puc-rio.br 32
9. Simulation Model for Energy Simulation Model for Energy
Purchases Purchases
A sensitivity analysis on the inputs reveals This tends to alter a company’s purchasing
that the percentage of the estimated load strategy – when forecasting very high
purchased in 2009 is the most important levels for the PLDs, it is cheaper to over-
factor to determine the total cost for that purchase energy than to risk any level of
year. under-contracting.
The higher the amount of energy The results for 2010 and 2011 are quite
purchased, the lower the cost. similar to those for 2009, but there is an
This is due to the substantial increase in even more marked tendency to cost
the Settlement Prices observed in 2009. increases, reflecting higher Settlement
Prices.
monica@ele.puc-rio.br 33 monica@ele.puc-rio.br 34
Simulation Model for Energy Simulation Model for Energy
Purchases Purchases
This sensitivity analysis suggests a One could also examine the penalty
possible cost minimization strategy: costs separately.
Keep percentages of energy purchases Let F be the total penalty incurred by
high in 2010 and 2011 and, to a lesser a distributor, that is, F= F1 + F2 + F3 .
extent, in 2009.
Components F1 and F2 always
Keep the energy purchase amounts well
adjusted in 2007 and 2008 to avoid represent a loss for the utility, while
unnecessary costs. F3 may bring profits.
monica@ele.puc-rio.br 35 monica@ele.puc-rio.br 36
10. Simulation Model for Energy Simulation Model for Energy
Purchases Purchases
Excessive cost due to over- Excessive cost due to over-
purchasing energy – 2007 purchasing energy – 2011
Distribution for F3 (2007)/L5 Almost all values 3.000
Quite often, the
represent a penalty, component F3 represents
1.200
Mean=8850298 Mean =-3.710148E+07
Mean=-3.710148E+07
2.500
1.000
i.e, an added cost profit, not penalty. This
Values in 10^ -7
(when F3 > 0). happens when its value is
0.800 2.000
0.600 1.500
negative.
0.400 1.000
0.200 0.500
0.000 0.000
-80 -60 -40 -20 0 20 40 60 -450 -312.5 -175 -37.5 100
Values in Millions
5% 90% 5% 5% 90% 5%
0 40.7846 -241.8353 12.1127
monica@ele.puc-rio.br 37 monica@ele.puc-rio.br 38
Conclusions Conclusions
One might think the new regulatory The new regulatory model tries to
model practically eliminated encourage a relatively high
distribution companies risk because purchasing level by means of
their responsibilities were asymetric penalties.
considerably reduced.
Now distributors are only required to
inform their demand forecasts. When companies under purchase,
But they are punished in case these correction possibilities are fewer
forecasts prove wrong. than when the opposite occurs.
monica@ele.puc-rio.br 39 monica@ele.puc-rio.br 40
11. Conclusions
The sophisticated regulatory model
implemented is fragile because:
the same acquisition strategy in the
auctions may prove profitable or not
depending on variables that are not
under the control of distribution
companies.
The Settlement Price - PLD is highly
volatile and this increases the
possibilities of punishment.
monica@ele.puc-rio.br 41