Published on 25-Feb-2011
Validated on 20 Dec 2012
"According to the dynamics of the Colombian power markets, it has become necessary to control our own application software. DRP and IBM ILOG allow us to implement new rules into any power and energy market solutions." - Juan Carlos Morales Ruiz
XM Compañía de Expertos en Mercados S.A. E.S.P. (XM)
Energy & Utilities
Business Performance Transformation, Smarter Commerce, Supply Chain Management, Infrastructure Simplification, Operational Management
XM Compañía de Expertos en Mercados S.A. E.S.P. (XM) (www.xm.com.co ) operates the Colombian National Interconnected System and also administers the Wholesale Energy Market—MEM—that in 2009 recorded transactions worth more than 6 million USD. XM coordinates, supervises and controls the power system to ensure safe, reliable and economic operation. XM takes bids from the generators, demand forecasts from the distribution companies and clears the market, deciding which bids to accept from the power plants in order to satisfy the needs of the distribution companies.
The Colombian electricity sector needs to match the supply to the demands of the distribution companies for the following day. The primary objective is to minimize the total cost of generation.
XM uses IBM® ILOG® optimization software to determine the most efficient, low-cost and reliable operation of the Colombian power system
Lowest cost solution to supplying the demands of the Colombian power market; Near 100% matching of supply to demand in a timely fashion; Flexible solution enables new rules to be easily entered into calculations; Conservation of hydroelectric power
Electricity, a commodity essential to modern life, must be supplied in a reliable and efficient manner.
Like many other countries, Colombia restructured its electric power industry in the mid-1990s in four separate sectors for generation, trading, transmission and distribution. Generation was fully opened to competition while trading started with a gradual opening. Transmission and distribution started to provide open access and received regulated revenues.
The model is similar to the way power utilities have been restructured worldwide to open the electricity sector to more competition and private investment. Crucial to this model is the system operator and the market administrator, which in Colombia is XM Compañía de Expertos en Mercados S.A. E.S.P. (XM).
XM (www.xm.com.co ) operates the Colombian National Interconnected System and also administers the Wholesale Energy Market—MEM—that in 2009 recorded transactions worth more than 6 million USD.
By means of the National Dispatch Center (CND), XM coordinates, supervises and controls the power system to ensure safe, reliable and economic operation. XM takes bids from the generators, demand forecasts from the distribution companies and clears the market, deciding which bids to accept from the power plants in order to satisfy the needs of the distribution companies.
Complicating the problem are many constraints on the power system. In some cases it is impossible to use power from a power plant in one area to meet the demands in another area, because there’s no transmission capacity to do that. Power plants occasionally fail and spinning reserves are required to protect against these failures or unexpected increases in demand. Generators have maximum output, minimum uptimes and downtimes, and ramping limits. Security constraints assure recovery following a disturbance.
Solutions to complex problems within seconds
How does XM meet the challenge of matching supply to demand every day? Besides the large number of variables, there is also very little time in which to work. The next day’s schedule must be published by 2:45 p.m. on the day before the power will flow. And there are limited human and financial resources to devote to the task.
Since 2003, XM has been using Programmed Dispatch and Re-Dispatch (DRP) as the official software to calculate the economic dispatch in the Colombian power system. The primary objective of economic dispatch is to minimize the total cost of generation while reliably serving the load and honoring the operational constraints of the available generation resources.
XM’s DRP software is based on IBM ILOG CPLEX® Optimization Studio, which represents complex business problems as mathematical models and uses advanced optimization algorithms to rapidly find solutions. XM sets up a large optimization problem called a unit commitment problem, and the ILOG software solves it within seconds.
Near 100 percent matching of supply to demand
The IBM ILOG CPLEX Optimization Studio uses callable CPLEX libraries to formulate the economic dispatch problem in terms of the data and decisions that are going to be made. The software then connects the problem to the data sources containing bids, forecasts, and other parameters, and the CPLEX Optimizer uses mathematical programming to solve the problem.
“In real terms, the major benefits of using IBM ILOG optimization tools are reflected in the Colombian electrical system,” says Juan Carlos Morales Ruiz, XM S.A. E.S.P. “Thanks to these tools, we can guarantee the fulfillment of the demand in a secure, reliable and economical fashion, close to 100 percent of the time.”
The solution to the economic dispatch problem tells the operator when to turn on the power plants and how much power to take from the plants that are on. The energy to get a power plant running and the lead time between turning a plant on and its actual availability to generate energy are factored into the equations.
On the following day when the power must flow to meet the demand, XM must go to a different market, called the balancing market, and make up for differences from forecasted loads, shortfalls from plants that are down for some reason and areas that are having transmission problems. XM continually monitors the electric system to make sure that every part is working properly.
For purchasing on the balancing market, XM uses an application called Ideal Dispatch, also built with ILOG Optimization technology.
Conserving hydroelectric power
The total installed capacity of the Colombian electric power system is 13.457 GW, comprised of 36 percent thermal plants and 64 percent hydroelectric power. Like other countries in Latin America, Colombia depends to a great degree on hydroelectric power. Deciding when to turn a hydroelectric plant on, however, has a different set of calculations.
The cost of running a hydroelectric plant is close to zero. Once the plant and its dam have been built, there are no capital costs involved. But that doesn’t mean that the electricity is free. The dams are designed to store water in the rainy season and use it during the dry season. There’s a finite amount of water to use for power generation. XM needs to use that water when it is most valuable, so it calculates a Reliability Charge representing that value. The Firm Energy for the Reliability Charge (ENFICC) is the maximum amount of electric energy that a generation plant is able to deliver on a continual basis during a year, in extreme conditions of hydro inflows.
The ENFICC of hydraulic plants is calculated using a computational model (available at www.creg.gov.co ), which maximizes the minimum energy that a hydraulic generation plant can produce per month during dry periods, using CPLEX as the optimization engine. The firm energy market pays generators a Reliability Charge determined by a competitive auction for each megawatt hour of firm energy committed. Generators in turn are obligated to supply energy at a fixed price whenever spot prices exceed a pre-defined “Scarcity Price.” The Reliability Charge amounts to approximately 700 million USD revenue per year for the power plants in Colombia.
“According to the dynamics of the Colombian power markets, it has become necessary to control our own application software,” says Morales. “DRP and IBM ILOG Optimization allow us to implement new rules into any power and energy market solutions.”
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Products and services used
IBM products and services that were used in this case study.
IBM ILOG CPLEX Optimization Studio
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