Integrated Resource Planning (IRP) Continues to Use Antiquated Methods – Strategist at risk of disallowances
The most popular software for Integrated Resource Planning (IRP) in the US is probably Strategist by Ventyx, who is now part of ABB family. ABB focus is power and automation technologies with revenues of $40 billion. Unfortunately, for Ventyx, software represents a speckle in terms of revenue in the grand scheme of ABB business.
The history of power planning involved numerous methods of short cuts, given the instantaneous nature of power and the lack of processing capabilities in the past. The instantaneous nature continues with power markets being settled hourly, if not sub-hourly, in some markets. Processing power has well advanced forward, following the famous Moore’s law. However, we still see short cuts in software such as Strategist.
In the recent filing done by Public Service of Colorado – parent company Xcel Energy – http://www.dora.state.co.us/pls/efi/efi_p2_v2_demo.show_document?p_dms_document_id=240772&p_session_id=
You will note in the documentation: “The Strategist model represents load for each month with a typical week composed of 168 hours that is then repeated to capture the full load for that month. As a consequence each 168 hour week is individually dispatched to minimize system cost.” A large assumption is being made that a week hourly shape within a month is relatively consistent. This is not a good assumption given the changing of seasons plus just the very nature of weather. Averaging the weeks into a month loses the variability of peaks and troughs. Historically, this was not important when intermittent resources were not so relevant, and computing power was limited.
However, times have changed and the process need not be shortcut. Below is the graph of Public Service of Colorado hourly load for the month of June 2012. The graph compares the average weekly line that would be used in a tool like Strategist to the actual hourly data. You can see significant differences in the shape. In fact the peak drops 14% and the minimum load rises 7%.
I currently don’t work for any software company, nor am I being paid to endorse any software product so I can say without a bias, Strategist,in its current form, is a risky software to use in the world of intermittent resources. With cost rising in all areas in the utility business, any misstep can lead to significant disallowances. Also, noted in the same document was an issue of space which limited the software to do a full optimization. “Despite algorithm efficiencies and Company efforts, such as locked expansion plan tails, this particular approach to expansion planning has the potential to eventually build more candidate plans than the data storage capabilities of the software can accommodate.”
This concern came from a result of Strategist design to evaluate the various options. Strategist will calculate all permutations regardless of cost effectiveness. Strategist limits some of the permutations by employing the Bellman Optimization method – no relation to your Energy Consultant but worthy tidbit of knowledge. To a large degree, I concur with this method. You want to see the various permutations since the most likely case to choose from will be a plan that is likely suboptimal in all reasonable scenarios. At the same time, it is also cost effective in all scenarios. If one were to focus on a particular optimal plan, feeling certain about the future would be too much of a gamble given the many moving parts in the energy space. A robust and resilient plan, that can be relatively cost effective in low and high for natural gas price, economy, carbon constraints, etc. world, is the better plan. This resilient/robust plan in each individual outlook of the future will likely be sub-optimal.
An alternative way to produce the robust/resilient plan with limiting the permutations is to go ahead and solve for the optimal plan given a discrete input. Ignore the various permutations. Alter the discrete input/scenario and solve again. In the end, you may generate many optimal plans in the various discrete input/scenario. With the various optimal plans, one could then run the optimal plans in the various discrete inputs/scenarios and see the additional cost of not knowing the future exactly. In addition, one could also create a permutation from the runs and see if it would produce a net benefit in terms of the cost in all the discrete inputs/scenario. The most robust/resilient plan will demonstrate a cost limiting plan in the various discrete input or scenarios employed. One could also test all the plans through a Monte Carlo simulation giving additional analytical rigor to the robustness and resilience of the plan.
I have spent much time thinking about devising ways to enhance and produce robust and resilient resource plans. There is much thought and process that can go into making a plan that would be at the very least considered a CYA plan. Taking short cuts in calculating and processing the power markets given its reliance on more and more intermittent resources should be avoided. Processing power, the value obtained, and the precision available for the various inputs support moving to hourly modeling without shortcuts. Sub-hourly inputs are not precise enough to do long-term planning runs and the benefits will be limited. Strategist could still have its place as an IRP software given that they spend some time upgrading it.
Your Resource Planning Energy Consultant,
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