Type: Master's Assignment
Programme: Computer Science or Mathematics
Contact: Albert Molderink, Johann Hurink
NieuweStroom
NieuweStroom is an utility in the Netherlands which sells energy to its customers using the hourly day-ahead prices. This approach is called Time Of Use pricing (TOU). At the moment they are the only utility in the Netherlands offering these prices. The mission of NieuweStroom is to drive the energy transition forward. They are convinced this is only possible with TOU pricing and the right tools for customers. With these tools they can exploit the TOU prices to save money, while simultaneously helping the energy transition.
As a utility, you have to buy the electricity that your customers will consume. NieuweStroom does this on the day-ahead market (which closes at noon the day ahead). This electricity is bought on a quarterly base. The difference between the actual consumption of the customers and the bought electricity (on a 15-minute base) is called imbalance. Imbalance is penalized by the TSO. The height of the penalty is based on the total imbalance of the system: the higher the imbalance, the higher the penalty. When a utility has “reverse” imbalance, e.g. the market on average has bought more than what was consumed, but you consumed more than what you bought, this penalty can be negative, allowing you to make money. So, lowering the imbalance does not only reduce the costs for NieuweStroom, it also reduces the overall imbalance in the system which enables a higher amount of renewable sources in the grid (which in general are unpredictable and lead to imbalance).
At the moment, one of the main challenges for NieuweStroom is to reduce the imbalance (costs). They have a varied portfolio with households, farmers, industry but also wind turbines and solar parks. The influence of renewable energy sources (wind and solar) is a major factor on the imbalance prices in the current market. An extra challenge for NieuweStroom is that their customers respond on the TOU pricing which is based on the bids and therefore only available after day-ahead market closing.
Assignment
For NieuweStroom, there are a number of potential solutions to overcome this challenge:
- By improving the predictions it is possible to reduce the imbalance volume. The influence of wind and solar is a major factor in this challenge.
- By buying or selling on the intra-day market – this is a market that closes just before the consumption interval with highly variable prices and limited volumes. However, to do so, you need to know whether you have to buy or sell; you need to know your position (do your customers consume more or less than expected).
- By predicting the “direction” of the overall imbalance and reacting to that it is possible to make profit by correcting the error of other utilities. As long as you are small enough to not influence the overall imbalance you do not influence the price and acting “reverse to the imbalance” is always profitable. This approach can be used on the day ahead market as well as on the intra-day market.
- The last option is to change the consumption of your customers: flexibility. This can be done either by curtailing renewables, Demand Side Management and/or buffering. Note that in this case it is possible to either correct mismatches between what was bought in advance and what is consumed by the customers, or to react to the overall imbalance of the market.
This assignment incorporates investigating where/when imbalance costs are introduced and solutions to reduce these costs. Furthermore, one ore more of the above mentioned solutions or solutions you come up with yourself should be evaluated using simulations on historical data.
This is a master assignment for Computer Science or Mathematics students. Interest in datascience is required. You can do this assignment either at Nieuwestroom (Enschede) or at the university with a NieuweStroom (daily) supervisor.