Oil-Price Based Long-Term Hourly System Marginal Electricity Price Scenario Generation

ABSTRACT

We synthesize scenarios of hourly electricity price, which is known as the system marginal price (SMP), for thirty-years based on the oil price. Hourly SMP scenarios are very important when planning new generators because the revenue and cost of new capacity margins are determined based on the SMP. Because the SMP contains both short-term and long-term periodic patterns, designing a single model based on these patterns to predict the SMP is difficult. Although oil price affects SMP, they can not be directly used in the forecasting model because the resolution of SMP is at hourly intervals, but that of oil price is at yearly intervals. To overcome these problems, we decompose the SMP into annual, monthly, and daily components, and the components are predicted based on different models. The model for the annual component (AC) is designed to predict the long-term trend based on fuel price scenarios. The model for the monthly component (MC) is designed to predict the seasonal trends based on the long short term memory (LSTM) model. The model for the daily component (DC) is designed to predict the daily SMP fluctuation. Finally, we synthesize SMP scenarios by aggregating three components. We make three types of SMP scenarios (high, reference, and low), and the performance of the scenarios is tested using previous data for two years on the basis of mean absolute error (MAE). Due to the global COVID-19 pandemic, the low type of SMP scenario is most accurate. We also verify that the reliability of long-term scenarios can be secured by using oil price while maintaining monthly and daily patterns. Author