Saturday, July 23, 2011

As the US Swelters, Electric Power Models Do the Job

Wherever you are located in the United States, you are most likely enduring record-breaking temperatures.

These record-breaking temperatures are putting extreme pressures on the generation of electric power due to the demand for running air conditioners, fans, etc.

In the area that I live in, the Pioneer Valley of Western Massachusetts, yesterday was the second biggest drain on electric power ever in the region, according to ISO New England, the Holyoke-based company that operates the electric power grid for the six New England states and ensures its reliability.

Interestingly, other high demand days occurred in the summer of 2006 and that is exactly the data that Dr. Zugang Liu, now of Penn State University at Hazleton, and I used to develop our electric power supply chain network model, using data from ISO New England. The study, An Integrated Electric Power Supply Chain and Fuel Market Network Framework: Theoretical Modeling with Empirical Analysis for New England, was published in the journal, Naval Research Logistics 56: (2009) pp 600-624.

Specifically, we constructed a novel electric power supply chain network model with fuel supply markets that captures both the economic network transactions in energy supply chains and the physical network transmission constraints in the electric power network. The theoretical derivation and analyses were done using the theory of variational inequalities. We then applied the model to a specific case, the New England electric power supply chain, consisting of 6 states, 5 fuel types, 82 power generators, with a total of 573 generating units, and 10 demand market regions. The empirical case study demonstrated that the regional electric power prices simulated by the proposed model very well matched the actual electricity prices in New England. We also computed the electric power prices under natural gas and oil price variations. The empirical examples illustrated that both the generating unit responsiveness and the electric power market responsiveness are crucial to the full understanding and determination of the impact of the residual fuel oil price on the natural gas price. Finally, we utilized the model to quantitatively investigate how changes in the demand for electricity influence the electric power and the fuel markets from a regional perspective.

The theoretical model can be applied to other regions and multiple electricity markets to quantify the interactions in electric power/energy supply chains and their effects on flows and prices in
which deregulation is taking place.

Moreover, the general framework can also be used to assess new redesigns of the electric power grid, a topic, a fellow Brown University alum, Matt Wald, recently wrote on in The New York Times.