Published on 30-Sep-2009
Validated on 20 Dec 2012
"We implemented IBM ILOG CPLEX in the Market Clearing Engine of the National Electricity Market in 2003. The results we have achieved with CPLEX have met our expectations and goals. We have also received good local support from IBM throughout the years when it was required" - An energy and utility company
Asian Energy Exchange
Energy & Utilities
The energy and utility company was established as a joint venture between the Energy Market Authority (EMA) and the Marketplace Company in 2001, the year the EMA was established as the industry regulator responsible for implementing a wholesale market structure and regulatory framework to support a competitive electricity industry.
Managed and operated by a staff of about 60 professionals, the company’s annual trading value for electricity products was over $5 billion in 2006. Every half-hour, the power companies update their rates for selling electricity to the exchange. The company must assemble these rates into a mix of prices and generation schedules that will satisfy consumer demand at the lowest cost possible.
IBM® ILOG CPLEX plays a critical role in this process, addressing more than 15,000 constraints and bounds that must be considered with each trade.
Competitive rates for consumers; Improved market performance; Reliable source of power
This energy and utility company was established as a joint venture between the Energy Market Authority (EMA) and the Marketplace Company in 2001, the year the EMA was established as the industry regulator responsible for implementing a wholesale market structure and regulatory framework to support a competitive electricity industry. The new market was designed to supply competitively priced electricity, open up the retail market to full competition, allow certain government-owned assets to be privatized, and encourage private investment in the Asia country’s power infrastructure.
Ensuring a reliable source of electricity at the lowest cost is a common objective for central power exchanges, especially in areas with several energy producers. The company oversees the first wholesale electricity market liberalized in Asia. As a “stock exchange” for electricity, the company serves as an intermediary between electricity retailers and local power companies by providing market governance and a central trading environment.
Every half-hour, companies offer to sell electricity on the wholesale market. Each company offers to generate various quantities of electricity at their selling prices. These offers are pooled in the wholesale market, where the MCE then determines the best combination of electricity generation schedules and their corresponding prices to yield the lowest cost for supplying the demand forecast for electricity, while taking into account constraints that include system security and reliability requirements.
The application is a crucial part of the company’s operation. Using IBM ILOG CPLEX, the market-leading mathematical optimization software, the company forms a solution for buying power to supply an Asia country with affordable electricity. CPLEX solves the problem within 30 seconds, addressing more than 15,000 constraints and bounds with each trade. Furthermore, by using IBM ILOG Concert Technology (CT) in developing and maintaining the optimization models applied by CPLEX, the company’s IT team is more efficient in maintaining the MCE.
The company continues to enhance and evolve in accordance with changes in the Asian country’s market rules. It uses CT in developing market clearing models, which are solved in CPLEX.
Using CPLEX has helped the company:
Consider all possible constraints with each trade.
Achieve the lowest generation cost for electricity offered to the Asian country’s wholesale electricity market while considering system security and reliability requirements.
Improve the performance of the electricity market.
Reduce the maintenance time for the trading system.
Products and services used
• IBM® ILOG CPLEX
Products and services used
IBM products and services that were used in this case study.
IBM ILOG CPLEX
IBM, the IBM logo, and ibm.com are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries, or both. If these and other IBM trademarked terms are marked on their first occurrence in this information with a trademark symbol (® or ™), these symbols indicate U.S. registered or common law trademarks owned by IBM at the time this information was published. Such trademarks may also be registered or common law trademarks in other countries. A current list of IBM trademarks is available on the Web at “Copyright and trademark information” at ibm.com/legal/copytrade.shtml Other product, company or service names may be trademarks or service marks of others. This case study is an example of how one customer uses IBM products. There is no guarantee of comparable results. References in this publication to IBM products and services do not imply that IBM intends to make them available in all countries in which IBM operates.