Loudon Energy Analytics is commercializing the ORFEUS (Operational Risk Financialization of Electricity Under Stochasticity) software system developed by researchers at Princeton University.
Loudon Energy Analytics to commercialize ORFEUS (Operational Risk Financialization of Electricity Under Stochasticity) software system developed by researchers at Princeton University.
Loudon Energy Analytics has obtained exclusive global commercial rights to the ORFEUS software developed by researchers from the Operations Research and Financial Engineering (ORFE) Department at Princeton under the DOE ARPA-E funded Perform Project. Professors Rene Carmona and Ronnie Sircar of Princeton’s Operations Research and Financial Engineering Department have joined the Advisory Board of Loudon Energy Analytics.
DOE ARPA-E Perform Project
Professors Carmona and Sircar developed ORFEUS under the DOE ARPA-E (Perform) program. The ORFEUS software uses stochastic analysis to optimize the risk profile of the grid. It incorporates a methodology to quantify, allocate and account for the risk introduced to the grid from the increasing penetration of intermittent renewable resources such as wind and solar generation. It has potential applications in system operations, system planning, asset bid optimization and minimizing carbon emissions.
ORFEUS Software
ORFEUS fills an emerging market need for stochastic modeling of the grid, where current models used by both grid operators and grid planners are not adequately equipped to represent the volatility in system conditions introduced by increasing levels of intermittent renewable resources. ORFEUS uses a full fundamental representation of the grid, incorporates stochastic scenario development and uses financial engineering concepts for stochastic optimization. It may be used by asset owners to optimize three different objectives:
1) Improving reliability by minimizing the probability of a grid outage due to imbalance in supply and demand;
2) Improving profitability by maximizing market revenues; and
3) Improving environmental performance by minimizing the carbon footprint of the generation fleet.
In addition, ORFEUS can provide expected distributions of Locational Marginal Prices (LMPs) through time on an hourly basis at a nodal level and Marginal Emission Rates (MREs) through time on an hourly basis at various nodes.
ORFEUS Applications
Storage Revenue Optimization
ORFEUS may be used to structure a market revenue maximizing bidding strategy for a storage asset.
It identifies Locational Marginal Price (LMP) spikes and troughs in space and time to identify optimal battery discharging and charging locations and times. ORFEUS schedules a storage unit in the day-ahead market for the hours the LMP is expected to be highest. Conversely, ORFEUS charges the storage unit for the hours where the LMP is lowest as predicted by a stochastic model and thereby minimizes the cost of charging the battery. For the real-time market, ORFEUS can inform when it is prudent for the storage owner to deviate from the day-ahead bid to capture revenues from price spikes which may develop in real time.
Scheduling Storage Units to Minimize Environmental ImpactORFEUS calculates Locational Marginal Emission rates (LMEs), in parallel with the LMPs. Growth in electrical demand driven by electrification of transportation and heating as well as the rapid build out of data centers and server farms to support AI is leading to interest in marginal emission rates of electricity production at various nodes in the system. ORFEUS may be used to develop optimal bidding strategies for storage resources co-located with datacenters to minimize reliability risk, maximize revenues or minimize environmental impact or find the right trade-off between the three objectives.
Bidding Strategy for Renewable ResourcesOwners of renewable assets may use ORFEUS to determine if taking a day-ahead position informed by the risk indices for the reliability of renewable production may be superior to being a passive price taker in the real time market. Renewable project developers may also use ORFEUS in the planning stage to evaluate site specific revenue estimates for potential sites.
Bidding Strategy for Conventional ResourcesWith added volatility of locational marginal prices (LMPS) introduced by increasing levels of intermittent renewable resources, existing bidding strategies adopted by conventional resources may become suboptimal over time. Asset owners of conventional generation fleets may opt to use ORFEUS to evaluate future revenue profiles of their existing assets and fine tune their day-ahead and real-time bidding strategies.