Strengthen demand forecasting for energy, power, and utility providers.
The balance of demand with supply and capacity within the energy, power, and utility industries is as intricate as it is important. Holding inventory is not just costly, but in many cases impossible, since electricity cannot currently be stored in large amounts. System operators must be able to accurately predict future demand for their services and be able to match it during peak consumption times while keeping holding costs to a minimum. Otherwise – it’s lights out for a lot of folks!
Competitive in nature, the electricity industry is awash with wholesale markets where suppliers, generators, traders, and customers buy and sell energy. Some deals cover energy needs several years out, while others are spot-trades for power needed that day. Having accurate forecasts of what will be needed tomorrow and up to 20 years out will keep power running in times of high demand while minimizing waste when consumption is at a low point. With probabilistic, risk-based, forecasting, planners will see improvements in long, mid, and short-term accuracy.
Long term forecasting
A 5- to 20-year view of energy demand will inform resource management and development investment decisions. Long-range planning should focus on accuracy within a relatively wide range of uncertainty. Precision in forecasts should increase as planning horizons shorten. Long-term predictions and recommendations should point decision-makers in the right direction while leaving room for flexibility in the plans.
One month to five-year horizons are used to plan for impending changes such as power production resources, tariffs, or inclement weather. Can we meet this demand under certain constraints? Scenario planning can be very beneficial in determining the best course of action should such drastic changes occur in the ability or cost of producing the needed energy.
Up to a week out, short-term planning looks to optimize production scheduling and analysis of the distribution network as demand needs become imminent. Operating plans that are flexible and agile at this stage, however, are supported by the accuracy of the long- and mid-term plans set in place months ahead. A plant’s ability to ramp up production of power in a certain region wholly depends on the design of the network during long-term planning: where long-range forecasts informed decision-making.
No matter the time horizon, planning effectiveness depends on demand forecast accuracy. Vanguard Predictive Planning is a cloud-based planning platform powered by probabilistic forecasting. If you are responsible for managing forecasting and planning in the energy and utility industry, request a demo today.