{"id":803,"date":"2013-10-03T20:36:43","date_gmt":"2013-10-04T01:36:43","guid":{"rendered":"https:\/\/allenergyconsulting.com\/blog\/?p=803"},"modified":"2013-10-06T04:59:48","modified_gmt":"2013-10-06T09:59:48","slug":"power-modeling-more-complex-than-refining-modeling","status":"publish","type":"post","link":"https:\/\/allenergyconsulting.com\/blog\/2013\/10\/03\/power-modeling-more-complex-than-refining-modeling\/","title":{"rendered":"Power Modeling More Complex than Refining Modeling"},"content":{"rendered":"

With my background in refining modeling, I can say power modeling is more complex than\u00a0<\/span><\/span>modeling\u00a0<\/span>most other markets.\u00a0\u00a0 The process of producing power is not as complex as refinery production, but the final product pricing and market is significantly more complex.\u00a0\u00a0 The refining modeling focus is typically on optimizing yield value while changing the crude input quality within the refineries capabilities.\u00a0\u00a0 The products can be stored and transported to the highest paying markets. \u00a0With power you just do not have that luxury of storing or even watching where it goes.\u00a0\u00a0 I will admit there are certainly more dollars in the Oil & Gas world than the power world.<\/span><\/p>\n

The power market is highly reliant on what the neighboring power plants are doing, and now potentially, your own customers.\u00a0 The other power producers may not be using the same feedstock as you.\u00a0\u00a0\u00a0They also may be operating the plant differently, nonetheless, their actions impact the price and flow of your power in that instant.\u00a0 The amount of information that must be processed in the power markets, to say the least, is voluminous.\u00a0\u00a0 To do proper power modeling, an hourly model is recommend.\u00a0\u00a0 If you do not do an hourly calculation you can be misled, for example as in LCOE calculations (<\/span>https:\/\/allenergyconsulting.com\/blog\/2012\/06\/05\/levelized-cost-of-electricity-lcoe-analysis-potentially-misguides-you-in-the-power-markets\/<\/span><\/a> )\u00a0 <\/span><\/span><\/p>\n

There are really two types of modeling that one can do.\u00a0 One is to try to understand market pricing and market dynamics, such as coal and gas demand.\u00a0\u00a0 In this setup, you draw your circle quite large and potentially model the entire N. America, which I have done numerous of times.\u00a0 In this setup you will model over twenty thousand units.\u00a0\u00a0 The alternative is to model one\u2019s own system for near-term operations or long-term resource planning, or both.\u00a0\u00a0 The market prices become exogenous inputs to the model.\u00a0\u00a0 I would caution against this setup in isolation due to the potential impact you may have on the exogenous inputs.\u00a0\u00a0 However, in most cases, one typically runs a series of exogenous price inputs to capture the variability.<\/span><\/span><\/p>\n

Both alternatives still deal with the commodity inputs and the load forecast, with the latter being the more potent of the two, assuming you use commodity outlooks across a reasonable range.\u00a0 Whether you are trying to understand market fundamentals or your system budget, you will have to deal with significant uncertainties.\u00a0\u00a0 Market based modeling compounds your uncertainty multiple times.\u00a0\u00a0 Modeling your own system, you compress a good portion of the uncertainty into the market price.\u00a0\u00a0 However, you still are left with dealing with policy issues (to Carbon Price or not \u2013 Renewable Portfolios \u2013 Demand Side Management \u2013 etc\u2026). \u00a0Of the many moving pieces\u00a0noted in the check list below, most change frequently over time.<\/span><\/span><\/p>\n

Power Modeling Check List<\/span><\/span><\/p>\n