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Electricity is produced by a variety of generating units, each with different lead times and costs to be readied for service, and production costs once brought online. Because electricity is a commodity that cannot be easily stored, generation should match consumption at any given time; therefore, the cost of generating electricity has a direct relationship to electricity demand, typically referred to as electricity load.
An accurate load forecast enables generators to optimize the mix of generating units that can serve the expected load while minimizing the production costs. This holds true for generators in both regulated and deregulated markets.
In several deregulated markets, the electricity market operator is in charge of dispatching the available generation units according to the market’s expected load and individual units’ offered generation costs. The units offering lower costs are dispatched first and those offering at higher prices may not be utilized.
The generation asset owners need to have an accurate forecast of the market’s expected load in order to decide the offer that maximizes the chance of their units being dispatched, while also maximizing profit. Accurate load forecasts can result in significant cost savings and profits for generation asset owners in both regulated and deregulated markets. Read more from powermag.com…
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