Improvements to Water Values
Aims
Water Value Series
Currently a run is restricted to the use of a single annual water value profile. This means sequences where the water values change significantly require multiple runs to model. I can see two ways to deal with this.
The first method is to produce annual water values starting at the end of a run, and then projecting these values backwards over the run. This method would produce a single dated water value sequence that is valid over the length of a run regardless of its length.
The second method would use annual water values always, but to allow them to be assessed starting at any date in the run. This method would produce a series of annual water value profiles. The run would then switch between profiles as it progressed.
The second method may allow more flexibility for user judgement on when profiles are likely to be reassessed. However, I have a preference for the first method as it is simpler, more widely understood from a theoretical viewpoint, and would not produce artefacts from switching from one profile to the next. This paper briefly describes water values calculated using the first method which is based around Stochastic Dynamic Programming (SDP) techniques.
Multi-Dimensional Water Values
The current system of controlling water release in EMarket operates each hydro system only with regard to its own stored energy. This method is clearly unrealistic in some situations, despite the fact that it manages total storage in the country fairly reasonably, with Waitaki dominating the control of marginal storage release. However, the other systems tend to be operated more loosely than would be expected in the real market as they are unable to anticipate system-wide shortage or excess.
With five major controlled reservoirs and two uncontrolled, the levels of which all potentially affect water values at any reservoir, a comprehensive multi-dimensional analysis of water value is quickly overloaded with complexity, inevitably resulting in excessive computation time for often marginal gain.
I propose a compromise consisting of a two dimensional profile for each reservoir, where two values determining water values are the local storage and the total of all other storage in the country. A water value profile could consist of, for each hydro system, $/MWh values for a set of storage values, e.g. 20 levels from empty to full for the local reservoir, 5 levels for the other national storage levels, giving 100 values in total. Water value at any level would be interpolated between these points
SDP can then be used to determine the two dimensional matrices for each hydro-system. It is still possible to use 1-in-N security factors to drive the cost of shortage, but this would probably need to be done by iterating the SDP and leading to excessive run times, so the design outlined in this paper uses another approach.