June 15, 2006

Computer-based hydro plant scheduling

Louis B. Deziel, PhD

Benefits of profit optimization

Some of the results that MPOpt produces are counterintuitive. For example, the software sometimes recommends:

• Production at less than full capacity when demand and price are at their daily peak. Doing so would be more profitable because together, selling regulation during the peak hour and using the water saved to produce energy and regulation at a different hour would more than make up for the lost revenue.

• Running the larger upstream plant harder than the smaller downstream plant, producing a water spill at the latter. MPOpt may even suggest that the downstream plant spill even more water than necessary so it can sell regulation, too.

• Emptying a reservoir during a heat wave and waiting for it to refill over subsequent days, in the anticipation that cooler weather will mean lower demand and lower prices. This would be a bolder move than historical operating policy, and one that staff may not be comfortable with.

In each case, MPOpt can quantify the additional profit that can be achieved from the suggested schedule, vis-à-vis the schedule that traditional operating policies would have produced. After seeing the results, Safe Harbor updated its operating policy and overturned long-standing rules of thumb—such as the rule to avoid spill.

Insights like these, which only modeling can provide, helped Safe Harbor to realize the potential of computer-based profit optimization. Implementing an optimization tool can also produce other benefits. At Safe Harbor, implementing daily profit optimization helped staffers think more about ways to improve operations. As a result, they identified a method for Safe Harbor to increase its production of regulation without adding capacity—by simply changing how the plant’s control system works.

—Contributed by Louis B. Deziel, PhD, founder and principal of Atelier (www.atelier.com); Marshall Kaiser, president and CEO, Safe Harbor Water Power Corp. (www.shwpc.com); and Dan Fylstra, president and CEO, Frontline Systems Inc. (www.solver.com).