The Heat Wave and Electric Power Supply Chain Networks

I hope that you are comfortable wherever you are.

The U.S. from the Midwest to the Northeast is in the midst of a major heat wave with scorching temperatures.

The impacts on comfort, air quality, and human health have been great.

The same holds for the pressures on our electric power grids and the associated supply chains.

Even our local paper, the Daily Hampshire Gazette, had three feature front page articles today with the headline RECORD SETTER? One of the articles noted that the heat wave is putting stress on the power grid and the demand this week may outpace that recorded back in August 2, 2006. 2 out of the top 10 demands for electric power in our community occurred in July 2006 and 3 in August 2006.

ISO New England, which is the Holyoke agency that operates the power grid for the six New England states reported the above results and is warning the region to decrease demand and take other measures to reduce electric power use. I toured the ISO New England facilities with a group of our UMass Amherst INFORMS Student Chapter members a few years ago -- simply stunning and fascinating and to see the optimization in action on huge screens was a real thrill for all of us. ISO New England is responsible for the reliability of electric power in New England, a big task.

Interestingly, my former doctoral student, Dr. Zugang "Leo" Liu, and I published a paper, An Integrated Electric Power Supply Chain and Fuel Market Network Framework: Theoretical Modeling with Empirical Analysis for New England, in the Naval Research Logistics 56: (2009) pp 600-624, which used a dataset for precisely the hottest month reported by ISO New England and, in the paper, we captured both the economic and engineering aspect of this electric power supply chain with alternative fuel sources.

This topic is very timely and even my fellow Brown University classmate, Matt Wald, writes in The New York Times about the complexity of the electric power grid and the many decision-makers involved in his feature, "Ideas to Bolster Power Grid Run Up Against System's Many Owners."

Plans are calling for a redesign of the U.S. electric grid, which could also significantly lower emissions.

Some of our other work on electric power supply chains has explored policies for emission reduction:
Optimal Endogenous Carbon Taxes for Electric Power Supply Chains with Power Plants
Anna Nagurney, Zugang Liu, and Trisha Woolley,  Mathematical and Computer Modelling 44: (2006) pp 899-916,

Modeling Generator Power Plant Portfolios and Pollution Taxes in Electric Power Supply Chain Networks: A Transportation Network Equilibrium Transformation
Kai Wu, Anna Nagurney, Zugang Liu, and John Stranlund, Transportation Research D 11: (2006) pp 171-190.

We have the models, algorithms, and insights to bring our electric power grids into the 21st century but it seems that we lack the political will.

How sad!

How ISO New England Ensures Electric Power Reliability for New England

The Independent Systems Operator (ISO) for New England has a tough job. It works to ensure the reliability of electric power for all of New England. I recently wrote about electric power network modeling.

Today's Boston Globe has a nice article on ISO New England that quotes Dr. Vamsi Chadalavada. In the article, the importance of weather forecasting is noted as well as demand management when the need for electric power, as we had recently due to the heat, gets too high. My daughter personally experienced the demand management when she was sent home early from her summer job last Friday because her school, where she is working, agreed to reduce power use by shutting off the air conditioners.

We had the pleasure of hosting Dr. Chadalavada as well as Mr. Richard Brooks in our UMass Amherst INFORMS Speakers Series. Mr. Brooks spoke on smart grid development whereas Dr. Chadalavada gave us an overview of New England's power system and markets.

As for some of the challenges and opportunities regarding the smart grid, a summary of the highlights of Mr. Brooks visit and talk at the Isenberg School can be found here.

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.

Congrats to ISO Midwest -- The 2011 Edelman Prize Winner!

Yesterday, I gave a seminar at the Management Sciences Department at the University of Waterloo in Canada. My hosts were simply fabulous and I so much appreciate their attention to detail, from hiring a van shuttle to/from Pearson airport in Toronto for me, for the fabulous lunch at the Faculty Club, and the wonderfully scheduled meetings with faculty and with students. I even got a great night's sleep the night before at the Waterloo Inn. I especially thank Dr. Fatma Gzara for making my visit to Waterloo so pleasant.

In my seminar yesterday afternoon, "Supply Chain Networks: Challenges and Opportunities from Analysis and Design," I spoke on our work on supply chains from electric power generation and distribution ones, results for which were published in Naval Research Logistics in 2009 to our more recent work on critical needs supply chains. I also highlighted some of our research on fast fashion supply chains and work that we are doing on perishable supply chains in healthcare. I also brought into the discussions some of our recent results on the Braess paradox.

There are so many universities in the Toronto area and I heard that about one third of the population in Canada lives in this part of Ontario! Some students from Wilfrid Laurier University (we could see it from the seminar window) marched over to my talk (and it took them about 6 minutes).

Last night, at the Pearson airport, prior to my flight back from Toronto to Hartford/Springfield, I met a manager who had just arrived from Shanghai and works for a high tech company in Connecticut which, among its products, manufactures high tech equipment for the apparel and fashion industry. Our 18 seater Beech airplane provided each of the 8 passengers on board with both an aisle and window seat (the solitary steward was almost double-overed standing up in it and there was no drink service). We continued our conversation during the flight which had some turbulence but nothing compared to that in two of my favorite movies: "Planes, Trains, and Automobiles," and "Airplane."

Now, I hear, that on the same day that I was speaking about our research that modeled the New England fuel and electric power market, using ISO New England data, INFORMS announced that the 2011 Edelman Prize Winner is ISO Midwest! Coincidentally, while at Waterloo, I spoke with Professor J. David Fuller who told me about the book that he is writing with Gabriel and Hobbs and others on energy and he will be including a section on variational inequalities in it! Professor Bookbinder and I also had a chance to then discuss the future challenges of global supply chains (obviously, the triple disaster in Japan entered our conversation and also my seminar presentation).

Congratulations to ISO Midwest -- the link to the youtube posting of the award ceremony and the official INFORMS press release can be accessed here. In fact, all of this year's finalists deserve congratulations.

Just think, where would we be without electric power and reflect on the citizens of Japan, who, in addition to their already severely disrupted lives after the earthquake / tsunami / nuclear disaster, are now subjected to rolling power blackouts and even elevated radiation in the food, tap water, etc. Today, the nuclear disaster was elevated to a level 7, the highest level, as was Chernobyl.

The Smart Grid -- Challenges and Opportunities

Today we heard a fabulous presentation on the Smart Grid by Mr. Richard Brooks of ISO - New England (NE). He is a Principal System Architect with responsibility for ISO-NE’s Enterprise Architecture since 2004. He is the primary author of ISO New England’s Smart Grid White Paper that was published in February 2009. Mr. Brooks spoke in our 2010 Spring Speaker Series to a capacity audience of researchers, faculty, students, staff, and guests from the community. The faculty and students were from the Isenberg School of Management, the College of Engineering, and Departments of Computer Science, Mathematics and Statistics, among others. The interest in the topic of smart grids is huge and we were so delighted to have Mr. Brooks share with us his immense knowledge and insights on this most important topic.

The Smart Grid is the tight coupling of: the power and delivery system and advanced IT and command-control monitoring capabilities, and supporting regulations, policies, market rules, and business processes that will improve the overall efficiency of electricity production, delivery and consumption, evolving from the existing grid infrastructure while maintaining high reliability and strong security.

Some highlights from today's talk:

The US government is behind the push for a Smart Grid with stimulus money being like steroids for the Smart Grid. The government wishes to utilize advanced, information-based technologies to increase power grid reliability, efficiency, and flexibility, and reduce the rate at which additional electric utility infrastructure needs to be built.

Hence, there is an intense need and desire to make the most out of existing capacity, while, at the same time, taking advantage of such innovations as smart appliances and devices, distributed resources and generation, including renewables (think wind energy and solar energy), and even the deployment and integration of advanced electricity storage and peak-reducing technologies, including plug-in electric and hybrid electric vehicles (very cool)! Plus, consumers are to be provided with timely information and control options regarding their electricity usage.

We got to hear about the Olympic Peninsula GridWise project (in which clothes dryers reduced their power after a triggered event), and about the Google Power meter, now in prototype.

It was clear from the talk why a Smart Grid is needed (including the need to reduce electricity costs and the challenges posed by intermittent sources, such as wind, plus, the NIMBY issue of building new generation and transmission facilities).

The objectives of the Smart Grid include those for reliability, for the environment, and for consumer control.

Significant paradigm shifts are now underway, some of which are:

1. The construction of new facilities is shifting to more efficient use of the existing system (so this is a great area for operations researchers and management scientists to work in).

2. Static operations parameters are giving way to dynamic calculations (including dynamic pricing).

3. Large supply sources are shifting to small supply sources (think of households and businesses generating their own power).

4. Centralized control is moving to decentralized control.

5. Passive customer participation will be moving to active customer participation.

6. Manual operations will be shifting to automated ones.

We will need new analytical tools for demand management, supply management, and network management, as well as markets management, along with more careful collaboration and coordination among stakeholders in the electric power supply chain (something my research group has published a lot on).

Mr. Brooks also talked about the role of the National Institute of Standards and Technology (NIST) since it was tapped to lead in standards for the Smart Grid (and this is one of the great challenges since interoperability is a huge issue). He suggested that NIST/DOE/FERC should prioritize design work and standards for system control among controlling entities.

We urgently now need:

1. a clear view of the Smart Grid from different states and the regulators;

2. what is achievable and by when;

3. new business models (up my alley);

4. new cooperation/collaboration paradigms (sounds like a great app of cooperative networks);

5. direction and leadership among all levels of government.

Mr. Brooks concluded his brilliant talk by summarizing the risks and by stating that the Smart Grid will not go away, that more intelligence means more complexity (indeed, what to do with the deluge of data that is starting to come in), and that the number of Smart Grid projects will increase dramatically as stimulus money is distributed this year.

Above is a photo of Mr. Brooks with the group that accompanied us to lunch at the University Club to continue the discussions. The discussions among those who were lucky to be in his audience today will continue for days to come! He clearly educated us and inspired us to see the Smart Grid as a dynamic, highly important topic for both deep research questions, as well as for practice. His talk was multidisciplinary and just perfect for our Speaker Series. We are indebted to him for his terrific presentation today.

Smart Grids and ISO -- New England

Today we are experiencing frightful winter weather in Amherst with heavy wet snow, downed trees, and with numerous electric power outages and with many schools and colleges closed. This kind of weather demonstrates how important the generation and delivery of electric power is to our homes, businesses, and not to mention to our schools and hospitals.

Several of my doctoral students have conducted research on electric power generation and distribution networks, which we also established have commonalities with transportation networks. Most recently, a former student of mine, Dr. Zugang "Leo" Liu, and I had one of our papers, "An Integrated Electric Power Supply Chain and Fuel Market Network Framework: Theoretical Modeling with Empirical Analysis for New England," published in the journal, Naval Research Logistics. This paper used data from ISO - New England.

ISO - New England (NE), according to its website: helps protect the health of New England's economy and the well-being of its people by ensuring the constant availability of electricity, today and for future generations. ISO New England meets this obligation in three ways: by ensuring the day-to-day reliable operation of New England's bulk power generation and transmission system, by overseeing and ensuring the fair administration of the region's wholesale electricity markets, and by managing comprehensive, regional planning processes.

This ISO (independent system operator) has numerous important roles. We are delighted that we will be hosting the talk of Mr. Richard Brooks of ISO - NE on Smart Grids, next Friday, March 5, 2010, in our Speaker Series. This Series is organized by the UMass Amherst Student Chapter of INFORMS, which I have been serving as the Faculty Advisor of since 2004. More information about Mr. Brooks' presentation, and other upcoming talks, can be found on this link.

The students have added a nice slide show on the chapter website, so do check it out if you have a chance.

Mr. Brooks' presentation will take place at the Isenberg School of Management at UMass Amherst next Friday, in Room 112, at 11AM. This talk, as others in this series, is open to the public. Please join us, if you can, and learn about a most important topic -- that of smart electric power grids!