Load Forecast Uncertainty Kick-Off Discussion February 13, 2013 LOLEWG Item-3
LFU Overview Load Forecast Uncertainty (LFU) is the amount of load variance modeled within the Loss of Load Expectation (LOLE) software which determines the Planning Reserve Margin (PRM) LFU is not the uncertainty of any given load forecast but the amount by which an aggregate 50/50 forecast will deviate 2
NERC Bandwidth Methodology - Background NERC Load Forecast Working Group (LFWG) developed Aggregated NERC projections Projections are the expected midpoint of future outcomes 50% probability that actual demand will be higher than the midpoint and a 50% probability that it will be lower than the midpoint. In addition, NERC also determined the amount by which the projection would vary at a given probability Upper and Lower 80% confidence bands around the NERC projections were used/provided 80% chance that future demand is within these bands 10% chance that future demand is below the lower band 10% chance that future demand is above the upper band These bandwidths explicitly address uncertainty from a statistical viewpoint 3
Megawatts NERC Bandwidth Methodology - Background 230,000 220,000 210,000 200,000 RFC - Summer Peak Demand 2010-2019 Projection 190,000 180,000 170,000 160,000 150,000 140,000 130,000 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Year Actual or Projection 10% Low Band 10% High Band 4
NERC Bandwidth Methodology - Background 1996-2004 Regression models To determine the NERC aggregated projections Independent variables included U.S. Gross Domestic Product (GDP), U.S. price of natural gas, population-weighted heating and cooling degree days, and U.S. price of electricity A Monte Carlo simulation model was used for estimating the energy and demand bandwidths This analysis incorporated uncertainty in 1. Economic variables 2. Uncertainty between the explanatory variables and load 3. Weather effects. 5
NERC Bandwidth methodology - Background 2005 2007 Regional and national bandwidths A univariate time series model for each region The regional projection of peak demand and net energy for load are modeled as a function of past demand and net energy The regional time series models are structured as a firstorder autoregressive process The current value of the time series is a linear function of the previous value and random shock/errors. Random errors are assumed to be normal and independently distributed, with mean of zero The variability observed in demand and energy is used to develop uncertainty bandwidths 6
NERC Bandwidth methodology - Background 2008-2011 For each region, an optimal model was estimated within a given list of time series models (used for energy, summer and winter peaks). This list of time-series models is comprised by ARIMA models, trend stationary models, and exponential smoothing methods. Best statistical model was chosen based on The Bayesian Information criterion(bic) test statistics Two unresolved issues Normality assumption on errors Model misspecification (small sample size, over fitting or non parsimonious model) To be addressed in the future updates 7
Bandwidth methodology NERC Load Forecasting Group disbanded since 2009. The 2009 analysis only included load data up through 2007 NERC Bandwidth s will no longer be updated Planning Year 2012 Planning Year 2013 Get the bandwidth data from NERC for three regions Collect LBA data Adjust bandwidths to MISO load Build Autoregression models ( similar NERC) Calculate the bands and LFU Develop the Bands and LFU 8
LFU Analysis Applied to PY 2009 (a test) Duplicate NERC s effort MISO re-calculated 2009 LFU using the same model and appropriate vintage data (1994 to 2007) Re-estimated LFU for PY 2009 would have been 4.10% LFU used in PY 2009 LOLE Model 4.04 % 9
MISO LFU Planning Year 2013 Planning Year LFU 2013 4.9% 2012 4.42% 2011 4.45% 2010 4.04% 2009 4.04% Last year, MISO received new data from the LBA s Hence revised MISO LFU is 4.9%. NERC LFWG did not publish the bandwidths in 2012 MISO used 2011 bandwidths to develop LFU for 2012 10
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 MW MISO Summer Peak Demand ( MW ) 140,000 130,000 120,000 110,000 100,000 90,000 80,000 70,000 60,000 Actual 10% Low Band 10% High Band 11
Local Resource Zones (LRZ) LFU Results for PY 2013 Aggregated the LBAs to get the Local Resource Zones (LRZs ) Load Planning Year Zones LFU 2013 Zone 1 6.2% Zone 2 5.9% Zone 3 5.9% Zone 4 5.7% Zone 5 8.0% Zone 6 5.8% Zone 7 8.6% 12
Planning Year 2014 Continue with NERC Bandwidth Methodology Planning Year 2014 Update data Build Autoregression models ( similar NERC) Develop the Bands and LFU 13
Planning Year 2014 Continue with NERC Bandwidth Methodology Calculate and share the results at upcoming LOLEWG meetings Share the input data that went into the analysis Allows transparency and data checking of the calculation Process Improvement Opportunities Stakeholders are encouraged to make presentations regarding different LFU approaches MISO will evaluate these alternative methods and report back to the stakeholders 14
Contact Info Maryam Naghsh-Nilchi (317) 249-2107 mnaghsh-nilchi@misoenergy.org Brandon Heath (651) 632-8473 bheath@misoenergy.org Davey Lopez (317) 249-5109 dlopez@misoenergy.org 15