More Than Just ETRM:
OpenLink’s Transaction Lifecycle Management A reliable energy portfolio optimization system is the cornerstone of any decision support tool providing the necessary information for the well-defined energy business workflow – starting from planning, budgeting via trading to scheduling and balancing. For an efficient (read profitable) solution to this task, the optimization tool must not only encompass the integrity, flexibility and uncertainties of the portfolio itself, but also provide the possibility to compound it together with a state-of-the-art ETRM system to a single fully integrated system solution package. This article gives an overview of OpenLink’s view on extended transaction lifecycle management.
Fully Integrated Multi-Commodity
Optimization, Risk Management & Trading Why Optimization? The requirements for optimization in the energy sector
are becoming more and more complex and volatility is becoming a driving challenge as well. Deregulation of the energy market is fuelling competition requiring constant adjustments in changing conditions. All these factors make high demands on optimization software with regards to flexibility, scalability, and performance. The ongoing growing/merging of energy companies
requires a global view into the multi-commodity – multi-asset portfolio resulting in a global optimum, and solving questions like the typical one for gas, ‘burn it?’ or ‘sell it?’, taking into account commodity and power markets, markets for ancillary services (i.e. co- optimization of power & primary/secondary/tertiary control) and imbalance energy, emissions (SOX, NOX, COX) and certificates, renewable energy (wind, bio- gas, solar), co-generation (district heating, process steam, potable water, …), etc..
Only exact modeling of the energy system can provide realistic estimations of possible profits across the whole portfolio
Most multi-commodity trading companies are
aware of their risks and are investing in ETRM products to mitigate them in order to provide the business with modern tools for maximizing profits. However, another way to optimize overall profits is to establish an optimal global strategy in the allocation of flexible resources and to align the individual strategies of traders with that of the company overall. This global approach concerns the whole portfolio and is optimal in that it takes account of all relevant commodity market prices, all flexible assets with their technical and economic attributes, and all topology restrictions (such as transmission networks with capacity shortages).
56 December 2012
Dr. Hausleitner, Dr. Reitgruber, Dr. Seiser Global optimal strategies can be calculated in
the short or long term taking into account market volatilities. In addition, inaccuracies in forecasts can be calculated under different scenarios. The creation of such strategies does not imply
a simplified modeling of assets. On the contrary; accurate modeling of the whole portfolio consists of many components together with restrictions applied on subsets of model components and is necessary to minimize production costs and indicate all market opportunities. Only exact modeling of the energy system can provide realistic estimations of possible profits across the whole portfolio. For example, in the power sector these include:
• Thermal power plants with or without co-generation (gas turbines, steam turbines, combined-cycle gas
turbines including heat recovery steam generator with/without supplemental firing, steam boilers, heat boilers, heat exchangers, electrical heat boilers, common steam headers),
• Hydro power plants (run-of-river, limited pondage, storage, and pump-storage),
• Hydro reservoirs and hydro flows,
• Complex long-term contracts (including contracted quantities, take-or-pay clauses, power prices, carry forward, make-up rights, …),
• Spot/Product markets for various commodities (including modeling of potential elasticity),
• Commodity storages (gas, thermal),
• Network constraints (transmission lines and nodal demands/supplies),
• Local and/or system wide reserve requirements,
• Renewable generation (wind, solar, geo-thermal, biogas),
... together with restrictions applied on sub sets of model components, such as
– Reserve conditions, – Maintenance scheduling, – Logical operating conditions, and
– Time interval restrictions (e.g. sequential startup of units)
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