Innovative software tools keep electrical markets humming

ARGONNE, Ill. (March 18, 2005) — Flip a switch and the power goes on. That is a hallmark of modern industrial life. Yet in August 2003, 50 million people around the Great Lakes and New England were without power, some for 30 hours. And in 2001, California was plagued with regular black- and brown-outs, in part related to serious transmission bottlenecks, as the state struggled through electricity deregulation.

Researchers in Argonne's Decision and Information Sciences (DIS) Division can help keep the power on. They develop next-generation energy and environmental market-simulation tools that model the complexity of the modern energy industry.

“Our mission,” said Dick Cirillo, director of the Center for Energy, Environment, and Economic Systems Analysis in DIS, “is to develop, apply and transfer innovative tools and techniques to analyze today's strategic energy, environmental and economic issues.”

Center researchers have been involved in modeling energy and environmental challenges for more than three decades and have studied projects ranging from coal-burning bans in Chicago to electricity deregulation to acid rain from fossil-fueled power plants. Much of the current work focuses on balancing the complexity of generating enough power, meeting strict environmental regulations and staying economically competitive.

Marketing and working within regulations are complex activities for any business, Cirillo said, “but electricity is a unique commodity, because you can't store it, and it all goes into an integrated network known as the power grid.”

Keeping the lights on is a complex task on the easiest of days. Power companies are in business to use their energy resources most efficiently to maximize profits. They have to work within system constraints and consider limited energy and transmission resources, contracts and agreements with independent power producers and bulk power transaction opportunities on the spot market.

The Argonne-developed Generation and Transmission Maximization (GTMax) model allows users to study complex marketing and system operations to find solutions that increase income while minimizing expenses. The model ensures that market transactions and operations remain within the power system's physical, institutional and environmental limitations. When multiple systems are simulated, GTMax identifies utilities that can successfully compete in the market by tracking hourly energy transactions, cost and revenues.

GTMax also simulates some limitations, such as power plant seasonal capabilities, transmission capabilities and hydropower reservoir constraints. Power companies use the software to determine hourly power and energy offers to customers.

The GTMax model grew out of Argonne's work with the Western Area Power Administration (Western) and the Bureau of Reclamation.

Western manages the power in most of the western United States, including all or parts of Arizona, California, Colorado, Iowa, Kansas, Minnesota, Montana, Nebraska, New Mexico, Nevada, North Dakota, South Dakota, Texas, Utah and Wyoming.

The U.S. Department of Interior's Bureau of Reclamation operates federally owned dams; Western markets and dispatches the electricity the hydropower plants produce.

The quantity and timing of water traveling through the dam is the biggest shared concern in hydro generation. “Power marketers,” said Tom Veselka, the lead developer of GTMax, “basically want to release all the water when prices are high to maximize profits.” That would be during hot summer day hours when the electricity would bring the highest rates. There are many reasons they can't do that.

Transmission lines physically limit the amount of electricity that can be sent.

Western must also consider environmental issues, such as

• River flow,
• Reservoir elevation,
• River bank stability, and
• Habitats of endangered species of native fish.

Western uses GTMax to simulate operations at many of its dams. One example is the Colorado River Glen Canyon Dam just upstream from the Grand Canyon. GTMax is used at this hydropower-generating dam to determine optimal hourly power plant operations that comply with a complex set of environmental constraints on reservoir water releases. Regulations restrict water releases by the hour, day and year at this dam.

GTMax provides a plan to operate the dam within environmental constraints. Cirillo explained, “The software allows Western to regulate the water flow to keep the fish happy while generating power economically.”

Western and the Bureau of Reclamation are using GTMax in other applications, including:

• Simulating downstream flows within limits specified under Environmental Impact Statement alternatives for the Flaming Gorge dam,
• Optimizing hydropower operations under different operating and flow conditions at the Hells Canyon dam,
• Modeling operations of a complex cascade of reservoirs and power plants under environmental limitations at the Aspinall Cascade,
• Determining purchasing-firm capacity and energy on behalf of its full-load service customers in California, and
• Allocating limited hydropower generation among Western customers. Using real-time data, GTMax schedules hydro energy allocations along with several different types of firm purchases on an hourly basis.

In addition to its strength in hydropower applications, GTMax can be used in thermal power applications including oil, gas, coal and nuclear.

Modeling for wise deregulation

As states and nations move to deregulate electricity, many are turning to Argonne's DIS Division and GTMax to provide solutions. In 2001, California provided a model of what can go wrong when electricity is deregulated without the ability to analyze the complexities of the marketplace beforehand and design the market rules appropriately.

In a regulated electricity market, one utility provides most electricity to an area. In a deregulated electricity market, generation, transmission and distribution are handled separately and under market conditions, where there are many more variables involved.

GTMax identifies utilities and assets that can compete in the market by tracking hourly energy transactions, costs and revenues. It allows for a simulation of how each of the players is functioning.

Argonne used GTMax in two applications in southeastern Europe. Working for a large international power merchant, researchers analyzed the economic and financial viability of two transmission lines in the Balkans.

GTMax was also used to model the operation of power systems in seven Balkan countries when they were run individually and when they were run together as a potential regional electricity market.

“The study showed,” researcher Vladimir Koritarov said, “that when the regional market starts operation, the region as a whole can expect lower net energy supply costs.” The regional market would provide more cost-effective electricity production, because the most economical generating units could be used by all, Koritarov explained.

Argonne performed the study with Montgomery Watson Harza for the U.S. Agency for International Development. The countries modeled in the study were Albania, Bulgaria, Croatia, Macedonia, Romania, Bosnia and Herzegovina, and Serbia and Montenegro.

GTMax has also been used by Japan, Poland, Argentina and the Philippines in their studies of deregulation.

New models

GTMax's capabilities continue to grow, but researchers in DIS are developing new types of models to take advantage of greater computing power and different modeling approaches.

Argonne's DIS division is one of the leaders in the developing world of modeling complex adaptive systems. The approach allows researchers to examine the behavior and interactions of agents, such as consumers or companies, functioning as individuals pursuing their own interests within a larger system.

“Complex adaptive systems modeling,” said researcher Prakash Thimmapuram, “allows us to deal with uncertainties, strategies, business preferences, and adaptation and learning.” DIS is developing a software tool – Electricity Market Complex Adaptive System (EMCAS) – to model the complexity of deregulated electricity markets.

“This is the first time that energy issues are being modeled as complex adaptive systems,” Thimmapuram said. Argonne is using EMCAS to model deregulated electricity markets in the Midwest. The initial applications of EMCAS are demonstrating the ability of this new modeling technique to provide new insights into how energy markets function. EMCAS is expected to be ready for initial release this spring.

DIS will use this modeling technique to study the development of a hydrogen infrastructure for the hydrogen economy of the future. Guenter Conzelmann, the DIS researcher who will lead the study, said, “The experience gained with applying complex adaptive systems modeling in EMCAS will give us a substantial head start on addressing the modeling of the evolution of the hydrogen infrastructure. — Evelyn Brown

For more information, please contact Steve McGregor (630/252-5580 or media@anl.gov) at Argonne.