July 2010 - Issue #10
Switched-on scholar masters the power game
Story by Brad Collis*
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PhD student Mohammad Hesamzadeh is already highly regarded as an electrical engineer. He is also building a reputation as an astute, albeit self-taught, energy market economist until he finds time for another degree. Add to that a genius for complex mathematical algorithms and you have a young Swinburne University of Technology researcher who soon may be directly responsible for keeping electricity prices down, vital energy-generation investment up, and the expansion of critical infrastructure such as transmission networks attuned to actual, not estimated, need.
These are the sought, but rarely achieved, outcomes from the entwined engineering and economic elements that underpin something we take for granted – electricity at the flick of a switch.
But keeping electricity affordable, reliable and sustainable in a deregulated and highly competitive national market, when pressure is also building to make room for new sources of ‘green’ electricity that are not yet economic, is a gargantuan task. In fact, finding the right balance within a system in which demand, supply and price are changing every few minutes, almost amounts to guesswork. The consequence, not surprisingly, is a suspicion that millions of dollars are probably leaking from the economy through inefficient energy match-ups.
One of the keys to balancing market competition with sufficient profits to encourage continued industry investment, plus accommodate new resources such as wind and solar farms, is the transmission network that interconnects all players.
In the wash-up of electricity market deregulation which took place in the late 1990s, the transmission network remains a monopoly (government) infrastructure used by a spread of highly competitive private-sector generators, wholesalers and retailers.
Management and the timely improvement of the transmission network is potentially the best mechanism for ensuring fair, profitable electricity trading, but until Mohammad Hesamzadeh’s work there has been no formula or modelling tool for accurately exercising this control.
For example, an issue for the market regulator – the Australian Energy Regulator (AER) – is the potential for a large generator to actually restrain supply when transmission networks are close to capacity (such as during a heat wave) to drive up spot prices. But how do authorities (who represent consumers) keep transmission capacity one step ahead of such an unpredictable demand-supply scenario?
Transmission networks are also critical for efficiently bringing new renewable energy online, but again there is no ready-made formula for accurately planning the capacity, location and timing of new transmission investments.
Dr Darryl Biggar, consulting economist at the AER, says this is an issue for deregulated electricity markets around the world. What has been lacking is a tool with sufficient computational power to model all of the components of electricity generation, delivery and consumption and the ability to measure how investment in transmission capacity would affect marketplace competition.
The variables that determine this are numerous and require complex computer modelling that can integrate both engineering and economic factors – two quite disparate matrices.
This is where Mohammad Hesamzadeh steps in. Though still to formally complete his PhD (on the economics of energy markets) under his supervisor, Dr Nasser Hosseinzadeh, who leads Swinburne’s Power Engineering Research Group, Mr Hesamzadeh has already published 15 research papers, five journal papers and has three others under review, bringing international attention to his ground-breaking work.
His achievement has been to develop the first computer model, and future software tool, that can assimilate the engineering parameters of electricity generation, the economics of wholesale and retail electricity markets, and the scale of transmission networks needed to join them all together.
The unique aspect of Mr Hesamzadeh’s approach is that he has been able to conceptualise, intuitively, both the engineering and the economic variables and then undertake the painstaking process of developing a mathematical model that melds them into a functional management tool.
A measure of just how difficult this has been, and why it has never been previously achieved, is that Mr Hesamzadeh has been working 12 hours a day, seven days a week, for three years on this project, conceiving, writing, testing, reworking and retesting complex mathematical equations.
He quips with a wry smile that it has been “brain eating” and that he is exhausted … then adds that the model so far developed has actually really only brought him to another starting point. He feels the progressive introduction of renewable energy from a mix of generation sources will present more challenges for market regulators. He would also like to test his modelling on other complex, environment-dictated markets, such as water.
To develop a model able to cope with numerous, fluctuating scenarios Mr Hesamzadeh has drawn on advanced computer algorithms, which draw on ideas from genetics and gaming principles (such as those that allow optimisation based on a sequential-move game to operate concurrently within a simultaneous-move game) to find the best strategies in a complex range of interactions.
Electricity producers and sellers effectively become dynamic ‘players’ in a giant multi-faceted market game. And in the real world there is also the unknown impact of the Australian Government’s proposed Carbon Pollution Reduction Scheme and Renewable Energy Target.
While building the model, Mr Hesamzadeh has worked closely with industry specialists, particularly Dr Darryl Biggar at the AER, testing his model on real-world conditions.
Dr Biggar says Mr Hesamzadeh has made an important step towards giving regulators a tool for more accurate cost-benefit analyses of transmission investments and the impact on market competition.
“The next step will be to see if what has worked on a comparatively small-scale network of about 20 generators will still work with the added complexities posed by a real world network of 200 generators,” he says.
It was the opportunity to work more closely with the AER and Dr Biggar on actual scenarios that encouraged both Mr Hesamzadeh and Dr Hosseinzadeh to move to Swinburne. Both were previously at Central Queensland University, where Mr Hesamzadeh started his research in 2007. His co-supervisor there was Professor Peter Wolfs, now at Curtin University of Technology in Western Australia.
Mr Hesamzadeh had earlier graduated (top of class) at Shiraz University in Iran, with a diploma in mathematics, a degree in electrical engineering and a masters degree in science. He came to Australia under an International Postgraduate Research Award.
Mr Hesamzadeh hopes the Australian electricity market will soon be the first to benefit from what he has achieved, though Dr Hosseinzadeh points out that others, such as the Californian and European market regulators, are also interested.
His long-term ambition is to stay in research. “I have enjoyed the challenge of the past three years. What we have achieved will be good for Australia … and it is rewarding to have created the beginning – a new approach to modelling – that will be good for science,” he says.
* Brad Collis is author of Snowy – The Making of Modern Australia, the history of the Snowy Mountains Hydro-Electric Scheme.
