Requirements of Modeling
We are currently in our continuous improvement plan cycle for Power Modeling Analysis (PMA). This includes updating our loads and revisiting our calibrations and adding other regions into our suite of fully calibrated pricing hubs. The process of calibrations requires the knowledge of understanding all the drivers of a dispatch model. With over 85 characteristics that drive unit operation and another 30+ combination of logic switches to change the dispatch algorithm requires years of experience to navigate and find the right recipe to produce the correct results.
Building and maintaining models is not an easy task. Typically these task are regulated to an inexperienced analyst which can lead to frustrating results and multiple waste of time. Our Power Modeling Analysis (PMA) requires 100’s of hours to maintain and that is using a decade long full-ranged experience power analyst who, not only is experienced in the analytics and software side, but also experienced in the management and operation of utilities.
There will be no model that is perfect – but we at All Energy Consulting have the pursuit of a perfect model. Waiting for the perfect model, you will be stuck in analysis paralysis which is as worse as having no model at all. Using inexperience analyst, you will lose the most important things in a model – the intimate awareness of the models limitations. I personally know all the limitations and issues with the PMA model. Many have asked the PMA model to do weekly projections – this is very possible, but this requires a different setup and data feed. The current data feed (monthly forward curves) limits the current setup. Plus the weekly requirements will need greater precision, such as outage feeds and more real-time load. All this is possible and we will pursue this, if our clients desire it.
As I noted in my Power Modeling whitepaper there is a significant amount of work required to model the power markets. Can you afford to leave that work to inexperienced analyst? I know some companies have a staff of 10+ trying to manage a power model. With that many hands in the model, there will be many issues in just the maintenance of the model. Then, typically many of them are all working on other projects not related to the model. This causes a lot of the work of maintaining and managing a power model to an inexperienced analyst. I have observed the destruction of great initial work, crumbling to meaningless garbage of output.
Besides running our own model and having the ability to customize it for each client, we can also help you maintain and operate your internal power models. It would not be cost effective to have a full-time, very experienced power analyst spending their effort on a model, given all the other task required to do in the company. Even if you could afford it, your typical employee probably does not enjoy that. They rather be fully engage in the results and leading the company in actionable decisions.
A model, no matter a power model or refinery model, the value is ultimately the ability to decipher the results and apply meaning to them. The only way that occurs is if you intimately know the models limitations and continuously maintain it. The markets are changing and your model will never be perfect, so a continuous improvement plan is needed. PMA has a continuous improvement plan. All Energy Consulting can help you understand the power markets by offering our PMA platform or helping you with your internal modeling efforts.
Stay tune our PMA results of Gas to Coal switching for 2015 summer will be released soon.
Your Tireless Energy Analyst,
David K. Bellman
All Energy Consulting LLC- “Adding insights to the energy markets for your success.”