A practical approach to assessment of the base power contracts and peak power contracts for a distribution utility

Abstract Mix of long term and short term contracts are essential in the portfolio optimisation of the distribution utility for meeting the unrestricted demand of the consumers at the minimum cost. Opening up of power market and the increasing open access transactions in India has made it essential to the distribution utilities to have optimum operation strategy for keeping the competitiveness in the industry. Further, the distribution utilities in India are also mandated with universal supply obligation, due to which the meticulous planning in long term has become more significant for their survival itself. Another aspect to be considered is the social impact on the cost optimisation of electricity procurement as the electricity consumption has direct links to the industrialisation and living comfort of the people. The gestation period of conventional generators is more than five years. Transmission line construction also requires a time span of 3 to 4 years from concept to completion. The influx of renewable energy characterised by the short gestation period, poor predictability and high degree of forecast error are also to be considered. Hence the portfolio optimisation problem becomes more of a management decision than a technical solution of constraint based mathematical modelling. The basic requirement for application in the electricity industry is that the method shall be simple and robust. After considering the several options available the authors have identified modified load profile forecast as the most suitable means for long range forecast of demand. The model relies on the suppression of local peaks when the demand is unitised and then deriving the cardinal points on a linearised load curve from the energy forecast. The method was applied with the actual demand of Kerala and the results are found to be good.