The energy industry is experiencing a drastic transformation by moving away from polluting energy sources (i.e., coal, gas) and towards green energy technologies – wind and solar, while the customers are becoming more proactive. With ever-growing market and the introduction of new energy technologies – hydrogen, batteries – in the market, the energy industry is becoming more dynamic and dependent on several regions instead of one.
When assessing the changes in the energy industry, the importance of monitoring and forecasting the energy market becomes indisputable. The amount of data needed for making forecasts is growing rapidly. Many different variables need to be accounted for to have accurate and reliable forecasts. And this is extremely important to Ignitis Group.
PLEXOS is one of the most popular market simulation engines in the world. Ignitis Group’s Innovations started analyzing this tool in 2020, when it was decided to improve and broaden energy market analysis and modelling competences. In March of 2022, after the introduction of the concept, a procurement was initiated. Currently, the tool is ready for use, and its implementation is in progress.
With the implementation of PLEXOS modelling tool, the Innovations team of Ignitis Group marks a new milestone. At this point, aside from continuing to look for and apply new technologies, we will also start supporting the Group’s business segments with information that is important for investment projects and energy trade agreements.
This tool combines simulations across electricity, water and gas markets. Highly advanced algorithms make it possible to model future scenarios, assess possible political and regulatory changes related to renewable energy capacity targets, emissions targets, market restructuring as well as optimize resources in all energy markets.
PLEXOS is an all-in-one tool that covers planning, forecasting, and optimization.
PLEXOS simulates the fundamental principle of operation of the electricity market, also known as "market clearing" while minimizing system costs for each hour of the selected forecasting period. Mathematical calculation algorithms – deterministic or stochastic – are used depending on the forecast period and the accuracy of model inputs (technical constrains, weather profiles, commodity prices, etc.). Typically, deterministic methods are used for short-term periods (up to 1–6 months), where the assumption of "perfect foresight" for inputs is accepted. Stochastic methods are used for longer-term predictions, where it is necessary to assess the volatility of inputs, i.e. for volatile variables, a samples of variable parameters (N, N1,..., Nx-1, Nx, where N is the annual profile of a specific parameter) are used, allowing assessment of edge cases as well.
The scope of model and data inputs is massive, ranging from technical parameters of specific generation unit to the economic indicators of commodities. The accuracy of model outputs also depends on the granularity of the data (annual, monthly, or hourly data). The biggest challenge is to manage the flow of data and identify scenarios that are relevant to the Group.
The Group's activities are not limited to the geolocation of Lithuania, but also include markets in the Baltic region, Finland as well as Poland. PLEXOS will help ensure the development of the Group's investment projects and the quality of services. PLEXOS will be used for simulating energy markets at different periods and investigating interfaces of different energy systems, which will enable high-quality reasoning and decision-making.
The main outputs of the model are focused on market price forecasts in the medium- and long-term periods. In addition, we are assessing the impact of developing renewable energy sources (RES) and their generation distribution on prices, the adequacy of the network and generation sources in Lithuania as well as the impact of investment projects on the markets.
We hope that PLEXOS will provide insight on such issues as:
To sum up, a typical use case for PLEXOS would be calculating indicators of a specific project (wind farm or solar park, storage technology), i.e., long-term profitability of the project, the capture price of the produced energy as well as the impact of the project on the energy market.
The PLEXOS tool boasts international recognition with a list of more than 400 companies around the world and customer satisfaction rate of 97 percent. It is already being used by Equinor, Fortum, Wärtsilä, Cez, Volue, etc. as one of the main tools for modelling the energy market.
Among other things, electricity transmission operators of the Baltic electricity system such as Litgrid, AST and Elering, have already chosen PLEXOS. Using a single tool will enable rapid exchange of results or data while performing studies of strategic directions of the Lithuanian energy system.
While analysing the market of several tool suppliers, PLEXOS was selected because its functionalities are suitable for the activities and needs of the Group. The tool's interface is also user-friendly and its results are accurate. The model validation for the Lithuanian market that was carried out in 2021 showed that the prices were identified with an accuracy of 98.5 percent. These factors ensure that the mathematical calculations of the model are accurate, and the reliability of the generated results will depend on the accuracy of the model inputs.
Want to know more? Contact our Modelling Specialist Matas Dijokas - [email protected]