Principles of electricity demand forecasting

Part IMethodologies
The importance of electricity demand forecasting, factors influencing the various ranges of demand forecasting, and their correlation and contribution to demand are discussed. Various models which can be used to identify the demand pattern and underlying growth to predict future demand are presented. A step-by-step method of building a forecasting model is also provided .

by Saleh M. Al-Alawi and Syed M. Islam

Introduction Sound and realistic forecasting is the key t o good planning in any industry. In an electric utility industry, this would mean developing demand forecasts t o plan for new resources for the system t o be able t o meet the future demand. Since a good utility should maintain its loss of load expectation within 0.2 days/yea r, the importance o f electricity demand forecasting is evident. A t the same time, the impossibility of developing truly accurate forecasts must be admitted. The simple fact that w e cannot foretell the future must be recognised. The soundness of a forecasting method should be judged not by its performance in a single case over one or t w o years but by its long-run performance, by its record o f success or failure in many cases over many years. A good forecasting method should address issues such as: weather-demand relationship, suppressed demand, nature of demand, socio-economic data, demand growth pattern etc. Historical data are o f extreme importance in demand forecasting and data preparation is an important aspect. A large number o f electricity demand forecast techniques have been reported in the literature. While some of them are quite old, some are still not quite out of their research stage. In this tutorial, these issues will be addressed and a method of building a forecast model will be developed. Importance of electrical demand forecasting Electrical demand forecasting of an electricity supply system could either be load (MW) or energy (MWh) demand from a specified group o f consumers connected t o the system. Demand forecasting can then be
POWER ENGINEERING JOURNAL JUNE 1996 defined as what sort of electrical demand a utility can expect from a specific nuniber o f consumers in a specified period o f time. The importance of electrical demand forlxasting is three-fold: generation expansion Flanning, transmission expansion planning, and financial planning. In addition, load forecasting helps the utility t o deterrnine the systems spinning reserve and fuel requirement, and plan their unit mai ntena nce scheduling .

Ranges of demand forecasting Depending on the period of study, demand forecasting can be divided into three ranges :
Short-term forecasting Short-term forecasts are intended t o be valid for a few hours ahead t o a few weeks. They play an important role in the day-to-day operations o f a utility such as unit commitment, economic dispatch, hydrothermal co-ordination, load management etc. A short-term demand forecast is commonly referred t o as an hourly load forecast. Medium-term forecasting Medium-term forecasts may be valid in the range of a few weeks t o a few months and even up t o a few years. They are necessary in planning fuel procurement, scheduling unit maintenance, energy trading and revenue assessment etc. for the utilities. A mediumterm forecast is commonly referred t o as the monthly load and energy forecast. Long-term forecasting A long-term forecast is required t o be valid from 5 t o 25 years. This type o f forecast is
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hot and humid day in summer or an extremely windy and cold day in winter is different from other normal days in summer and winter, respectively. Growth in electrical demand during the economic boom time differs considerably from demand during the recession Deriod.

1 Degreeday/energy relationship

important in deciding on the system generation and transmission expansion plans. A long-term forecast is commonly known as an annual peak load and energy forecast.

Factors affecting electrical demand Electricity demand of a power system is heavily influenced by several factors like the weather, socio-economic and demographic variables. Examples of some of these variables are temperature (T), relative humidity (RH), wind speed (W), precipitation (PR), snowfall (SF), global radiation level (RL), duration of bright sunshine (S), temperaturehumidity index (THI), wind-chill index, comfort index (CI), degree days (DD), number of consumers connected (CON), population (POPU), gross domestic product (GDP) etc. In fact, the numbers of such variables are t o o many and, depending on the range and nature of the forecast, they should be carefu Ily selected. The selection criterion for these variables could be based on human intuition and would have t o be finally validated by their correlation and contribution analysis for a medium-term forecast. In addition t o the above variables, there are some casual variables which seldom arise but have a definite impulse-like effect on load such as the lunar festivals, religious events, national holidays etc. Electrical demand of a power system is also characterised by several features. Demand during the day differs from that during the night, and demand during weekdays differs from the weekends. Demand on an extremely
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Historical data and their relationship to demand In forecasting electrical demand, the role of historical information can scarcely be exaggerated. Success of a demand forecasting method largely depends on the availability of data such as the hourly temperature, percentage relative humidity, wind speed, vapour pressure, global radiation level, duration of bright sunshine and cloud coverage in a day, precipitation and snowfall etc. Some other useful vdridble, are also obtained by synthesising these raw variables. THI and CI are examples of such variables. DD measures the deviation o f average daily temperature from the airconditioning threshold level. If DD is positive, energy is required for cooling and if it is negative, energy is required for heating. CI is a measure of discomfort resulting from the combined temperature-humidity effect. Fig. 1 illustrates the DD-energy relationship. Other data of considerable significance, especially for the medium- and long-term forecasts are the socio-economic variables like the GDP of the nation, population o f the franchise area, number of consumers connected, number of new housing and industry permits allotted, number of new infrastructural projects etc. The relationship between electricity demand and the above variables, however, is highly nonlinear in nature. Fig. 2 shows a typical daily load curve together w i t h the temperature clearly showing the temperature-load lag. Any method of electrical demand forecasting is then based on a special way of relating the above variables t o demand. Nature of electrical demand Electrical demand in effect, much t o the relief of the forecaster, is cyclic in nature, as shown in Fig. 3. This Figure shows the monthly energy consumption pattern over the period1 980-86 for the Muscat power system in the Sultanate of Oman. From the graph, it is clearly seen that the demand curve has a pattern which repeats itself over the years and the peak of the curve is increasing consistently, signalling growth in demand. Thus, the job of the forecaster reduces t o a pattern recognition one and finding the underlying growth .

Models used in demand forecasting

Load forecasting models commonly known
as the methodologies may be classified into

t w o broad categories: autonomous models and conditional models. Autonomous models attempt t o relate future growth of electricity demand of a system based on its past growth, and conditional models POWER ENGINEERINGJOURNAL JUNE 1996

attempt t o relate the electricity demand growth t o other variables, namely, economic indicators. Forecasting approaches like the statistical techniques, socio-economic models etc. belong t o the autonomous class, and approaches like the econometric and microanalysis models based on end-use modelling belong t o the conditional class. Statistical techniques like the Box and Jenkin's model,' exponential smoothing,? linear and multiple regression,2 adaptive and weather models,' state estimation,2 and Kalman filtering have been applied w i t h reasonable success for short-term load forecasting. These models are mostly based on a weighted mathematical relationship between temperature and demand. The weights are calculated in most cases through a linear or nonlinear regression analysis. Analogical methods like the one based on negative correlation between the growth rate and specific consumption or the Gompertz extrapolation method have been used w i t h some success in medium t o long-term demand forecasting. These methods are capable of forecasting demand far beyond the period covered by historical data. Socioeconomic models3 implement a mathematical fit of historical demand and limited weather and demographic data. This method is reported to be effective in t h e medium-range demand forecasting. Other

Table 1 Correlation and contribution of variables to demand

input variable
T," R, H W

correlation factor

contribution
%

S
R
RH,"

DD CI CON

0.901 37 (0.1402 1 ) 0.1 6604 0.63579 0.59722 0.1 2575 0.92201 0.92607 0.32741

7 4 9
6 7 1 0 27

9
2 1

methods such as econometric models and microanalysis are also used in demand forecasting. Two of the most recent methods used in developing electrical demand forecast models are artificial neural networks"6 (ANNs) and expert systems' (ESs). Expert system models can incorporate experts' opinions and rules-of-thumb used in demand forecasting while the strengths o f ANN models reside in their ability t o combine the time-series effect of demand patterns w i t h the effect of weather, social and economic variables. Expert systems and ANN-based forecast models are currently under development and better results are already being reported in the literature compared t o
2 Typical daily load curve showing temperature-load lag

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POWER ENGINEERING JOURNAL JUNE 1996

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3 Enerqy consumption for the Muscat power system for the period

1980-86

common statistical models Prior t o building a forecasting model, the first step is t o clearly understand the problem in order t o establish the forecast range and objectives. Once the problem is fully assessed, the planner should then focus hidher attention on preparing the data for developing the forecasting model. Data preparation for modelling can be broadly classified into three distinct areas: data specification, in which variables of interest are identified and collected; data inspection, in which data is examined and analysed; and data preprocessing, in which some data may be restructured or transformed t o make it more useful. Data specification involves t w o primary activities: variable selections and determining data sources. There are many social,
Table 2

economical and weather variables that could possibly affect the demand forecast. A wish list of these variables for model building should be generated by the planner through scanning available literature, consulting experts in the area in question, and by conducting brainstorming sessions w i t h colleagues. Variables in this list should then be examined t o assess whether historical data for such variables are available or not. For variables w i t h readily available historical data, data sources should be identified and the data should be collected. Once data for a set of candidate variables are collected, data analysis should then be used t o weed out the potential input variables from the wish list generated so that only the most relevant variables are used t o develop the forecasting model. Some of the more popular statistical techniques used are the coefficient of correlation R, the coefficient of determination R2 and the ordinary least squares ( O b ) regression analysis. A detailed discussion of these statistical techniques is beyond the scope of this article, but treatments of these techniques can be found in References 2, 8 and 9. As many people discover when they try t o model real-world problems and processes, clean data is a luxury that is all t o o rare. Data collected from the different sources are generally noisy, contain many gaps and outliers, and are poorly distributed. These issues, if not properly addressed prior t o the model's development, could lead t o inaccurate and unreliable prediction. Collected data, hence, has t o be inspected well and analysed carefully. The first step in data inspection is t o examine individual variables for erroneous values and t o remove these values from the data set after careful analysis and only if these values prove t o be erroneous. Each variable should also be inspected for outliers as well as missing data. Once the most significant input variables are selected and carefully inspected, the forecaster should then examine the distribution of each of these variables. The shape of the distribution will indicate t o the planner whether a particular variable needs data preprocessing. Data preprocessing may involve many mathematical operations. Cornmon techniques include ca Icu lati ng sums, differences, differentia Is, inverses, powers, roots, averages etc. With all candidate variables being correct,

Comparison of statistical error indices

ANN model mean error (ME)

mean absolute error (MAE) mean squared error (MSE)

10026.79
13860.71 8.53E+08 4.772079
9801.001

25861.33
3801 2 25 2.84E+09 14-29275 26878.72 0,88880

13764.58
27455.42 145E+09 10-98471 19413.91 0.91359

19633.75
3 1437.92 1.95+09
1 1.91582 22229.96 0.90391

mean absolute percentage error (MAPE) standard deviation of error (SDE) coefficient of determination R2

0,94266

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POWER ENGINEERING JOURNAL JUNE 1996

4 Monthlyenergy forecast for the Muscat power system

400

300

200

100
I

B & J model PM model

l l l l l l l l l l l l l l i l l ~

J F M A M J J A S O N D J F M A M J J A S O N D
month

complete and normally distributed, t h e planner must select a n appropriate forecasting model(s) to use. Selection among these techniques will depend on t h e forecast t i m e horizon selected, available data, available time, and on t h e cost of forecasting. The forecaster should realise that t h e optimal level of forecasting is one where t h e cost of implementing a forecast just offsets t h e cost of operating with a poor or inadequate forecast. I n general, there is seldom one single superior forecasting method. One organisation may find one approach to b e effective. Another organisation may use several approaches. Once forecast results are obtained from t h e selected model($, they need to b e validated for accuracy. Some of t h e c o m m o n indices that are used to determine forecast accuracyare mean error (ME), mean absolute error (MAE), mean squared error (MSE), mean absolute percentage error (MAPE), standard deviation of error (SDE) and coefficient of determination (R2). These indices are extremely useful in comparing forecast accuracy. Fig. 4 shows t h e monthly energy forecast obtained by several models together w i t h t h e actual energy consumption for t h e Muscat power system. Table 2 shows t h e comparison o f statistical error indices for these models in Obtaining the above forecast. When evaluating t h e different forecasting we should always rememberthat t h e objective O f anyfOreCaSting activity i S to provide a forecast with a sufficient degree Of accuracy a t t h e least possible cost. POWER ENGINEERING JOURNALJUNE 1996

References

BOX, G.E., and JENKINS, G.M.: 'Time series analysis' (Holden-Day, San Francisco, 1976) BUNN, D.W., and FARMER, E.D.: 'Comparative models for electrical load forecasting' (John Wiley & Sons, 1985) BARAKAT, E.H., and AL-RASHED, S A , : 'Social, environmental and economic constraints affecting power and energy requirements in fast-developing areas', Power Engineering Iournal, 1993, 7, (4) pp. 177-184 PARK, D.C., EL-SHARKAWI, M., and MARK, R.J. II: 'Electric load forecasting using artificial neural networks', /E Trans., 1991, PAS 6, pp.442-2 29 RAHMAN, S., and BHATNAGAR, B.: '.An expert system based algorithm for short-term load forecast', I Trans., 1988, PWRS 3, pp.392399 ISLAM, S.M., and AL-ALAWl, S.M.: 'Forecasting long-term electrical peak load and energy consumption for a fast-growing utility using an artificial neural network' Conf. Rec. IPEC '95, Singapore, pp.690-695 STEIN, R: 'Selecting data for neural networks', AI Expert, 1993, 8 . ( ) pp.42-47 2, BURDEN, R.L., and FAIRIES, J.D.: 'Nurnerical analysis' (Prindel, Webber and Schmidt, 1985) MENDENHALL,W,, and BEAVER, R.J.: 'Introduction to probability and statistics' (Duxbury Press, 1994) IEE: 996
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Saleh Al.Alawi is with the Department of Electrical & ElectronicsEngineering, Sultan Qaboos University, Sultanate of Oman. Syed Islaw is with the Department of Electrical and Computer Engineering, University of Newcastle, NSW 2308, Australia. He is an IEE Member.

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