Influence of temperature and load forecast uncertainty on estimates of power generation production costs

The paper considers the use of production costing models for short term operations planning. In this period an accurate forecast of the hourly ambient temperature during the study horizon and the knowledge of the initial operating states of each generating unit are assumed to be available. Uncertainties in the production cost and marginal cost resulting from the generator availabilities and hourly loads are considered. Measures of these uncertainties are obtained from an analysis of two years' actual hourly load data. Monte Carlo simulation is used to estimate the contributions of uncertainties resulting from load and generator availabilities to the variance of production costs. It is found that ignoring the ambient temperature forecasts and correlation among hourly loads results in inaccurate prediction of costs, and that load uncertainty accounts for a significant portion of the variance of production costs. The initial states of the generating units also have an important effect on the costs.