According to the National Planning Commission, there is a pressing need for an Independent, Transmission System and Market Operator (ITSMO) in South Africa in order to turnaround the country’s current debilitating energy crisis. The National Development Plan (NDP) 2029 is explicit on the requirement for the system operations, planning, power procurement, purchasing and contracting functions within Eskom to be separated into an independent institution entirely.

Global predictive analytics company FICO has been instrumental in optimising energy storage, energy asset management, gas portfolio management, and market channel optimisation to private and public institutions worldwide. FICO, along with its’  SADAC and East Africa  partner, Kakanyo Business Solutions is excited by the prospect of rolling out mathematical optimisation in order to accelerate performance in the local energy markets.

“As the global energy industry becomes more and more complex, both public and private energy companies are rapidly expanding their use of mathematical optimisation across a wide array of business areas. Power plant operation is often driven by the prices of commodity markets and when to run is based upon market prices for electricity, reserves, fuels, and carbon. The SA government’ gradual move towards a more centralised system of energy supply makes sense as it allows for more accurate modelling of power supply and demand,” says FICO’s VP Global Partners & Alliances, EMEA & Asia Pacific , Mark Farmer

A senior modelling expert at one of the companies working with FICO says: “Power market prices vary by time of day, by season, and through market volatility. In most cases, there is no obligation to produce. Here, we create value by choosing when to produce energy. Our organization needs the smartest technology available to inform our energy production decisions, which is why FICO models run at the core of a number of our decision processes.”

Previously, the company used a spreadsheet model to calculate energy storage by frequency support, price arbitrage, peak avoidance, imbalance management, and power-to-gas. But it found that this was not the most efficient way to value energy storage and the task was much better suited to a linear programming solver from FICO Xpress Solvers to provide the best outcome with the given constraints. It can now base its energy storage valuations on a combination of multiple income sources. This new ability to identify both complementary and mutually exclusive income streams is helping to develop more robust business cases.

Through FICO Xpress Solvers, the company is now able to offer its expertise on predictive maintenance in power plants to other energy providers worldwide, which opens up new revenue streams. This predictive power can help determine things like the least detrimental and most cost-effective time of year to plan for station shutdowns for repairs, finding optimal times when energy demand is low and value of energy produced is minimal.

The energy company is now better equipped to deliver products into a number of market channels by using technology to decide the optimal mix of reserve and energy in each period with accuracy and precision. Once calculated, the value of both energy and capacity is known, and can help determine how much energy can be sold to a counterparty and how much reserve should be made available to the system operator to maintain or restore system frequency.

With Eskom currently exporting energy to Zimbabwe, Lesotho, eSwatini, Namibia, Botswana. Mozambique and Zambia, the ability to calculate an accurate assessment of demand capacity and reserves would be a great advantage, especially given the utility’s current challenges with local supply.

As renewable energy is part of its growth plans, optimisation would assist the utility to be able to forecast prices of power and reserve by simulating the market’s balancing mechanism then realistically allocating reserves in order to determine when it is in the best interest to curtail wind power to support the system.

“Using cloud computing on the FICO Xpress Optimization suite allows running of more complex models faster, delivering results in shorter periods and would enable new business opportunities across all  energy markets that SA trades with, which would be a great boon for South Africa’s positioning as a leader in Africa’s energy sector,” concludes Ali Rodolo, MD of Kakanyo Business Solutions.