Peak Demand in US Electric Sector
Continuing with our analysis from the previous post discussing Peak Energy, we delved into the Peak Demand. Peak Demand is measured in MW vs. Peak Energy MWa. Peak demand is typically define as the highest point of energy consumption. This is very important due to the nature of electricity. Compared to other commodities, the whole market would not crash for an extended period of time if one could not supply the peak demand point. However, in the case of electricity this becomes a real problem. Therefore, much planning is focused on peak demand and figuring alternatives to avoid peaks. Many commercial and industrial customers can see the bulk of their bill is tied to the peak vs. their average energy consumption.
As we discussed in the previous post, our objective is to produce a forecasting method for our new product, Power Market Analysis (PMA). Now that we had a very good system in forecasting monthly energy across N. America using GDP and CDD and HDD from various parts of the country, we needed a way to forecast the monthly peaks. The analysis of peak demand differed greatly from the analysis of peak energy. Applying the same statistical approach used in peak energy was going nowhere. First, we had to replace the monthly CDD and HDD with weekly maximums given we wanted to forecast peaks not averages. This improved the analysis. As expected, given the economic value of reducing peak vs. energy efficiency we saw many more regions decouple from economic growth in establishing peaks. We also modified the analysis to look at the relationship between average energy and peak demand. This method established a range for expected peaks in both a normal expectation of weather to extreme cases of weather variations within a month.
Counter to many who are have been alarmed at peak demand growing faster than energy, our analysis leads us to forecast a much slower growth in peak vs. energy. This is supported by the economic incentives to reduce peak demand is far greater than reducing energy consumption. In addition, measurement and validation of the various programs to mitigate peak demand is much more “accurate” than energy efficiency programs.
Power Market Analysis (PMA) will allow subscribers a very good view of the power markets and their relationship to the Coal and Gas markets. One of our goals is to increase the fundamental understanding of the market. We will issue monthly studies to our subscribers. The inputs will be clearly displayed for both the base and the extreme cases. Subscribers will also be able to customize runs. There is a large incentive for early bird subscribers. Please do reach out to me ASAP if you are interested in signing up to PMA (614-356-0484 [email protected] ). We will send a sample file you can expect from PMA. The official product launch likely in the later part of February. Besides a financial discount early birds will also be able to guide the product development of PMA and be able to get “free” reports while we finalize the product. We are building PMA to allow the evolution of the product. Our current long-term vision could have users having the ability to submit input changes and output be generated for them overnight.
Your Enthused Energy Consultant,
614-356-0484
Twitter: AECDKB
