PHOENIX, Oct. 27, 2020 /PRNewswire/ — In 2016, Nexant grid experts Joseph Bright and Mauro Prais discovered a solution to the problem of indeterminacy in the clearing value of electrical energy in power systems. In particular, the patented approach successfully and consistently determines the clearing values (e.g., prices) when multiple solutions for clearing exist. This fundamental breakthrough can be applied within the energy industry as well as all other industries. A patent was issued on September 8, 2020, for the methodology: U.S. Patent No. 10,770,901.
“Within the electrical energy markets, value indeterminacy may lead to wild swings of congestion rent values. In energy transmission markets, this indeterminacy may cause large amounts of counter-flow bid payout, great variations of returns, and disparity of values across periods. Such variations and disparities may negatively affect energy generation and transmission systems in a long term.” observed Mauro Prais, a Principal in Nexant’s Grid Management practice.
Joseph Bright, Vice President of Grid Management, said, “Our first inclination when faced with the value indeterminacy problem was to research methods in other industries and throughout the Operations Research field that might address the problem and their application to the electrical energy and other industries. It was quite a shock to realize that nothing existed and the problem has been evidently overlooked. So we proceeded to conduct research to solve the problem.
In a power system, bids are specified for a resource (e.g., power generation and/or transmission) and value quantity (what the bidder considers an appropriate value for obtaining or supplying the resource). At the solution, each resource amount is awarded based upon bids, scarcity in the market, and the associated clearing value (how the market values each resource). Multiple solutions of resources can be handled by pro-rationing of awards. Joseph Bright and Mauro Prais discovered and patented an approach mitigating the clearing value indeterminacy. In this approach, a follow-up optimization determines consistent clearing values using a secondary objective (e.g., price averaging, congestion rent minimization, or auction revenue maximization), while maintaining the original resource awards. As the result energy generation and transmission systems are provided with long term consistency.
“The idea of optimizing the clearing values remains brand new. It opens up previously-hidden tools as its application can be seen to be quite broad. Many other objective functions of the secondary optimization have been or can be developed. Optimization is never a single solution but a family of market solutions and explanations regarding the results,” said Bright.
This innovative solution was recently added to Nexant’s iHedge software and is available for use by Independent System Operators (ISO), generator owners and energy consumers. Nexant’s iHedge software has been successfully deployed at most of the ISOs in the United States and the market system operation center in New Zealand.
Nexant is a software and consulting firm that provides innovative solutions to improve customer engagement, boost operational efficiency, and save resources. We offer expertise in demand-side management, grid management, and renewables, as well as a comprehensive suite of software designed to support these initiatives. Every day, we work with customers to reimagine the world we live in and create a more sustainable energy future.
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