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Measuring the price of security of supply

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Measuring the price of security of supply

Andy Philpott

The University of Auckland

www.esc.auckland.ac.nz/epoc

(joint work with Kailin Lee, Golbon Zakeri)

- Minzone and energy margin
- How much energy margin to hold for possible dry winters
- Castalia Review of Security
- Electricity Commission Reserve Energy Review (Nov 2007)
- Energy margin depends on generators’ policies

- Computational models for minimum expected cost
- Stage and Larsson
- RESOP (Read)
- SDDP (Pereira) = DOASA (Guan,Philpott)

- How should we compute energy margin?
- How good is DOASA versus Stage and Larsson?

π(100)=0

π(50)

π(m)=T

π(70)

Single reservoir with capacity 100MWh

Three thermal plants each capacity 3MW,

cost $45, $50, $100/MWh

One hydro plant capacity 3 MW

Demand is 8MW peak, 5 MW offpeak

Inflows are 1..8 MWh each with Pr=0.1

Inflow of 0 with Pr 0.2

52 peak hours and 52 offpeak hours

- 70 Historical inflow sequences (1934-2004)
- Use 2005/2006 demand and cogeneration data
- Geothermal capacity offered at zero cost
- Wind capacities set at expected generation and zero cost
- Thermal plant capacities and costs as in DOASA
- 2005/2006 Minzone used (June 2005-May 2006)
- DOASA assumes 10 (stagewise independent) random openings from 1995-2004.
- Initial Marginal Water Value (SL)= 0

HAW

MAN

TPO

demand

N

S

demand

Takes about 8 hours on a standard Windows PC to converge

Upper Bound

2005-2006 GWh storage simulated with historical inflow sequences

SL Policy computed using same parameters

as DOASA

Cuts for SL recorded with slope b and intercept a.

Policy represented in DOASA by adding cuts of the form

ri parameters convert m3 to GWh for reservoir I

SL: 4159 GWh

DOASA: 3741 GWh

DOASA Thermal Fuel cost = $141 M

Stage-Larsson Thermal Fuel cost = $157 M

DOASA Thermal Fuel cost = $207 M

Stage-Larsson Thermal Fuel cost = $297 M

- Energy margin depends on generators’ policies
- Analysis so far assumes policy is to minimize expected cost via a central planning model: risk aversion might alter the energy margin required.
- What if we assume oligopoly model? Could compute the margin for result of Nash equilibrium policies (e.g. using Dublin)

- If we adopt a central plan model then we must be aware of differences between Stage and Larsson, RESOP, and DOASA. These will give different recommendations for reserve.
- This the first comparison made between DOASA models and heuristics. DOASA is better than I expected.