Issues with AEMO Forecasting, Part 3

The AEMO models the future adequacy of the NEM electricity system, one of the key outputs being an annual “Electricity Statement of Opportunities” (ESOO), whose stated purpose is to alert industry to potential opportunities for new generators. This post is about whether or not the ESOO is achieving its stated purpose, the conclusion being that it largely fails because it focuses on a single number (average unserved energy) as a measure of system adequacy. This single number is usually zero, which does not convey any information about how close it is to being non-zero, and when it is non-zero it conveys no information about how bad the energy shortfall might be in a severe heatwave summer.

The key quantity modelled by AEMO is unserved energy (USE), the expected average number of MWh that the system will fail to provide (in the absence of special measures being taken), as a percentage of total annual consumption. The Reliability Standard for USE is 0.002% (around 250 MWh in South Australia), and the value of USE is quoted if the Reliability Standard is exceeded. To gain some insight into USE I have calculated actual sample values for it, as the amount of non-wind supply varies, for years 2009/10 to 2014/15, the ones for which AEMO provides wind trace data at 2016/17 levels.

The following figure shows how USE varies with non-wind supply in South Australia for 2013/14 weather and demand, for a system with no wind power (black), 2016/17 level wind power (red) and 150% of 2016/17 wind power (blue):


The figure above indicates what might happen in the future if non-wind supply drops below 3000 MW, but it obscures the situation around the very low percentage of the Reliability Standard.

The following figure shows the same data as above, but with a focus on the very low percentages of the Reliability Standard:


The figure above reveals that the effect of 1500 MW of 2016/17 wind power on un-served energy would be equivalent to a few hundred MW of firm capacity, but 50% more wind power would not provide 50% more equivalent firm capacity.

The following figure shows the same data as above, but for all the 6 years used by AEMO in its assessment of future USE values, for South Australia. Note that for display purposes the value of un-served energy is limited to 0.004%, double the Reliability Threshold:


The figure above shows a high degree of consistency for the effect of 2016/17 level wind power, and for 50% more wind power. The main difference between the years is simply the varying amount of demand, which is due in large part to the varying severity of heatwaves and to whether or not the severest ones culminated on working days.


A prediction of future average USE figures involves modelling plant availability, including unexpected outages, and future demands, and this is what the AEMO does. Leaving aside issues of the validity of the various ingredients in the calculation, this post is suggesting that ESOO reports would benefit from much more information being provided, for example giving information for each separate year (2009/10 to 2014/15) that goes into the future year averages. It is likely that the future averages are dominated by one or two severe heatwave years in the past, whose effect gets considerably diluted by averaging over all six years examined.

Reliability standard breaches come from a few severe heatwave days with low wind power, it would be easy to do a poor job of modelling unexpected outages on these heatwave days, for example via a limited number of Monte Carlo runs that have a good chance of no outage falling on a heatwave day.

The Monte Carlo approach, and use of averages by AEMO may not be appropriate for this problem. An alternative approach would be to focus on credible worst case scenarios, such as the highest demand seen in the last 6 years, at the same time as an outage at a major generator or interconnector.

There are many obstacles to getting conventional generators built, and one such obstacle may be the limited amount of (and possibly misleading) information being provided in ESOO reports. Builders of wind farms do not have a problem with the quantification of system adequacy, the only relevant information for them is their capacity figure, which they can estimate themselves from information available elsewhere. Maybe ESOO reports are poor because nobody reads them, because nobody is currently contemplating building conventional generators.

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1 Response to Issues with AEMO Forecasting, Part 3

  1. Allan O'Neil says:

    I fully agree with your main point that the ESOO reports would be far more informative and generally useful if AEMO presented clearer and richer information on modelling results, not a single cryptic USE figure for each year.

    My reading of AEMO’s methodology document (see the link in my WattClarity piece on USE) is that they run 84 simulations with demand traces scaled to achieve a maximum equal to the 10% Probability of Exceedance maximum demand forecast, and 42 simulations with demand scaled to the 50% PoE maximum (so there is not the breadth in maximum demand outcomes across these simulations as is represented in your charts above). Results from these individual simulations are aggregated into a single “expected” USE value. Clearly more information on the distribution of simulation results would be helpful – they attempted this in the June 2017 ESO, but in classic AEMO fashion they tried to do this by publishing an almost incomprehensible table without definitions of what most of the values in the table actually meant.

    The other thing to remember is that AEMO is constrained to use the form of USE measure adopted by the AEMC’s reliability panel and the standards defined in the National Electricity Rules, but this shouldn’t stop them from also providing more transparent information on supply-demand balance.


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