“Modeling and Optimizing Generation Portfolios with Complex Hydro Networks”Webinar (November 12, 2015)

Agenda / Expectations

• Introduction / Company Overview• PCI Platform and System Overview• PCI Optimization Framework• Optimization Model – PCI GenTrader• Demonstration• Wrap Up / Questions

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Optimization - Observations

• Generation portfolio optimization is universal– Reduce costs or increase profits– Value is measurable

• Robust portfolio optimization is not just UC/ED– More than load, unit data, price data– Fuel, pipeline, A/S, Emission, CC,

Transmission, Renewables, etc.– More complex = more need = more value– Automation and integration is crucial

• Hydro/Thermal Co-Optimization is the Holy Grail

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Hydro Electric

Fuel Markets

Thermal

Pipelines

Wind

Emissions

Transmission

Optimization within Organizations

• The “one guy (or gal)” syndrome– Scalable?– Repeatable?– Enduring?– Ability to integrate?– Ability to Automate?

• The 100MB Spreadsheet– Supportable?– Permission based?– Auditable?– Stable?– Upgradeable?– Enhancements?– Market dependable?– What time horizon?

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Key Takeaways

• PCI handles the most complex systems - optimizes thermal and hydro resources across all commodities and markets

• PCI has consistent data model and optimization engine for short term, long term, and post analytic simulation

• PCI has open API, auditable, and can be automated for workflow management

• PCI is a collection of “one-guys (gals)”

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PCI Overview

Company:– Software Development for Energy Markets– 180 employees as of 11/2015

– Advanced level/skilled employees– Privately owned – no debt / organic growth.– Offices in OKC, Houston, Raleigh

System:– PCI GSMS (Generation Supply Management System)

Portfolio Optimization ISO Bid/Offer Management Bidding Analytics Shadow Settlement Post Analysis Deal Management/ETRM Gas Management Data warehouse & BI

Market:– 60% of US generation capacity using PCI– 70% of Fortune 500 Utility & Energy companies

Transactional Database, Workflow Management, Communication, Permissions, Auditing, Web Browser Interface, APIs

Platform

Markets: ALL

Front Office

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ISO Communication, Bid/Offer Management, Bid Evaluation, Price Forecasting

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Trading

Markets: ALL

Deal Capture, E-Tag, Deal Analyst, ICE Interface, Gas Management, Contract Settlement, RT Pricing

Asset Operations

Markets: ALL

Outage Management, Journal, Plant Interface, GADS, Energy (QF) Scheduling, Gas Pipeline Scheduling

Post Analysis

Markets: ALL

Operational Performance Metrics

Optimization

Markets: ALL

ST, LT, Risk

P&LAnalyzerSettlementAnalyzer

PositionAnalyzerCustomAnalyzerCustomAnalyzerCustomAnalyzerCustomAnalyzerCustomAnalyzerCustomAnalyzerPCI Data Warehouse

Back Office

ISO Shadow Settlement, Allocations, Pre-Settlements, Reporting, Energy Accounting

PCI Application Platform

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PCI GenPortal PCI GenManager PCI GenTraderPCI Deal

ManagementPCI Asset

OperationsPCI PostAnalysis

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MEM

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MEM

What PCI GenTrader Can Do For You

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LT WM DA

Planning:>1 month< 30 years

Portfolio Structuring

Risk Management

Earnings Forecasting

Asset Valuation

Term Trading

Origination Pricing

Within Month:>1 day< 1 month

Optimize Net Open/Residual

Asset Management

Outage Management

Fuel Forecasting

Emission Forecasting

Day Ahead:>1 Hour< 1 Week

Resource Plan

Suggested Trades

Open Position

Wind Management

Fuel Procurement

Deal Capture

WD PA

Within Day:>0.5 Hour< 1 day

Intra-day optimal dispatch

Outage rescheduling

Wind adjustments

Deal Capture

Post Analysis:>1 Hour< 1 Year

Key Performance Indices

Outage Costing

Transaction Costing

Operational Efficiency

OperationsPlanning Day Ahead Post AnalysisReal Time

PCI GenTrader Applications

Plan with real characteristics

Forecast with real characteristics

Execute with real characteristics

React with real characteristics

Measure and improve with real

characteristics

PCI GenTrader – Feature Evolution

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Unit CommitmentEconomic DispatchLoad & Generation

Constraints: *Fuel *Transmission

Opportunity: *Ancillary Services

Opportunity: *Markets *Options

Constraints: *Combined Cycles

Constraints: *Emissions *Renewables

Opportunity: *Hydro Thermal Co-optimization

Improved computational power and speed increases

Improved optimization logic enhancements and methods

Optimization: Maximize Profits

• Find (solution variables)– Generation schedules– Bilateral purchases and sales– Market purchases and sales– Fuel purchases and sales

• Such that (objective function)– We can achieve maximum Profit = REVENUE – EXPENSE• While meeting the constraints

Supply = DemandRespects physical limitations

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GenTrader Input and Output

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Markets Power Markets Fuel Markets Depth and tiers transmissions pipelines

Prices LMP curves Energy Ancillary Services Fuel Volatility Correlations

Generator Characteristics reservoirs/waterways operating limits ancillary capabilities ramp & cycling limits heat rates hydro power curves emission rates startup profiles

planned & forced outages Contracts

Options Forward (quantity risk) Energy Ancillary services Fuels Emissions

Financial Data Revenue and expense Mark-to-Market P&L Production costs O&M costs Emission costs Expected portfolio P&L Portfolio Risk Exposure Arbitrage opportunities System Net Open Position

Physical Data Optimized unit schedules Energy & Ancillary Services Combined-cycle operation Waterway flow schedules Reservoir elevation levels Contract schedules Recommended option exercise Fuel consumption Capacity factors, starts/stops Emission constraints Outages

Study Types 1 hour to 30 years Optimized UC Fixed UC

Run Modes Portfolio Stress Test Stochastic

*stochastic information

Optimized Plan Workflow in EIM Market

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OD+0 OD+1..7

Day-Ahead PlansDay-Of Plans

PCI GenTrader

Load ForecastAncil Svc Req.Unit OutagesFuel PricesHydro Cond.

Optimal Balanced Schedules• Energy• Regulation up/down• Spin Reserve• Non-spin ReserveTransmission… …

GenTrader Optimization Capabilities

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Portfolio Manager

Fuel Manager

Fuel Markets

Fuel Contracts

Pipelines

Storage

Emissions

Water Manager

Hydro SystemCascaded

Reservoirs, Waterways

and Generating

UnitsHydro Electric

Asset Manager

Power Trader Scheduler

Power Markets

Power Gen

Loads

Power Contracts

Trans-missions

AncillaryServices

Wind

Solar

Generation/Trans-mission Planner

Demand Response

PCI GenTrader Data Models

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Price Library [Power]

Power Market [Purchase]

Plant

Power Market [Sale]

Unit

Forward / Option [Sale]

Reservoir Hydro Unit

Fuel Market [Purchase]

Price Library [Fuel]

Fuel Market [Sale]Forward [Sale]

Forward / Option [Purchase]

Forward [Purchase]

NOx

CO2 and Other Emissions

SO2

Waterway

Hydro-Electric Network Optimization

• Optimize thermal and hydro resources across all commodities and markets

• Consistent data model and optimization engine for all both short term and long term simulation

• Fully integrated and automated or stand-alone deployment

• Support operational planning, trading, and bidding activities

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Hydro Network Optimization

• Network topology– reservoirs, waterways, power houses and pumps.

• Optimal scheduling of water flow (cfs), reservoir elevation level (ft), and power generation (MW)

• Comprehensive hydro-electric characteristics– Head/Flow dependent generation efficiency (cfs/MW/ft) – Head/Flow dependent pumping efficiency– Reservoir storage function– Tailrace elevation function

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Hydro Network Optimization

• Non-linear Head-Dependent Hydro-Electric Conversion Function– Pumping and generation– Varying water to power rate with head level– Up to 10 head segments and up to 10 MW breakpoints for each

head segment – Tailrace level (optional), which could reduce head, could be

affected by the rate of water discharge at outlet.

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Hydro Network Optimization

• Reservoir model– physical min/max storage limits– target lower/upper bounds with violation costs

• Waterway model– Min/Max flow limits– Direct and reverse flow costs– Multiple waterways between reservoirs

• Hydro Generating/Pumping Units– Operating limits, cycling constraints, O&M costs– Multiple units on a single penstock– Multiple penstocks for a unit

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Hydro Network Topology

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Generator/Pump

Reservoir

Ground

Connector

Hydro Nodes

Runoff

Penstock

Spillway

Water Release

Waterways

Reservoir Model

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• Storage Function– Elevation vs Volume

• Storage Limits– Hourly min and max

• End-of-period Target Levels– Hourly lower and upper bounds

with violation costs• Natural Runoff– Hourly inflow and outflow

Waterway Model

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• Waterway Types– Penstock– Spillway– Bypass

• Controls– Hourly min/max flow– Flow ramp rate– Spillway gate– Delays

• Costs– Direct flow costs– Reverse flow costs

Generator Model

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• Capabilities– Hourly High/Low Operating Limits– Generation and Pumping Capacity– Ancillary Services

• spin/non-spin, reg-up/reg-down, etc.

• Efficiency– H/K curves (head-dependency)– Pumping efficiency

• Constraints– Minimum up/down time– Time between gen and pump modes– Must-run– Startup sequence

• Cost Characteristics– Startup costs– O&M costs

Study Setup

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Same model used for 1-hour to 30-year studies by setting begin and end dates

Gas-day or Reservoir-day definition could be different from calendar day

Handling of NERC Holidays in Standard Product Definition

Support both Optimized Commitment and Fixed Commitment

Reserve sharing

Modeling Capabilities

• Study Types– Short Term and Long Term– Portfolio and Stress Test– Stochastic Analysis

• Markets– Markets and transmissions– Price libraries

• Contract Types (power, fuel, emissions)– Forward– Options

• Generation Asset Model– Heat rates and pump/generation efficiency– Generating units and reservoir/waterway operating limits– Ancillary service capabilities– Cycling constraints, emission constraints, fuel constraints– Multi-stage units (combined cycle)

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Input Data

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Markets• BAs• ISOs

Transmission• Power

Transport• Fuel

Price Libraries• Price index• Forward curves

Contracts• Buy/Sell• Commodities• Emission Allowances

Generation Assets• Plants and units• Hydro Networks• Unit fuel supplies• Emission sources

Running a Study

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Output Data

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Multi-Stage Unit Model

• Distinct Stages– Operating limits– Ancillary service capabilities– Heat rates– Ramp rates– Min up/down times– Fuel sources and blends– Emissionsone stage ≈ one simple cycle unit

• Transition Matrix– Transition allowed/disallowed– Transition time– Transition cost– Transition fuel consumption– Transition constraint

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Model of a 3-Stage Unit

Ancillary Service Scheduling and Dispatch• Balanced Ancillary Service Schedules

– Supply >= demand for every a/s type in every period– Clearly identifiable individual resource supplying a/s– Required by ISOs to feasibility and dispatch instructions

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Ancillary Service Requirement vs Responding Resources