Competitive Energy Insight, Inc.

Phone: (858) 566 - 0221

Fax: (858) 566 - 0287



The Strategic Energy and Risk Valuation Model (SERVM) is a powerful reliability planning tool used by some of the largest utilities in the nation that helps to answer questions such as:

  • What should my target reserve margin be so that I can provide resource adequacy at the lowest total cost? 
  • What is the capacity value of wind, pumped storage, or other renewable resources?
  • How should interruptible, energy efficiency or other demand side programs be priced?
  • What is my risk of not being able to serve firm load customers in upcoming seasons?
  • How much should I be willing to pay for short term capacity and how much should I buy?
For many years, Resource Adequacy in the United States was assumed as a given. Even large utilities assumed that between FERC, NERC, and state Public Service Commissions, reliability planning should be taken care of.  However, as these questions demonstrate, reliability planning is an area that can impact many aspects of a utility’s business model resulting in optimized cost structures and minimized reliability exposure.
Since most reliability events are high impact, low probability events, a large number of scenarios must be considered. Anyone can build a “worst-case” scenario that results in reliability problems, but that approach really provides zero value. SERVM differentiates itself in that it not only determines if a reliability event could happen, but also quantifies the likelihood, the magnitude, and the economic cost of such events. To do this, SERVM utilizes historical weather, economic load growth forecast error, historical hydro and other energy-limited resource data, and unit performance history to perform hundreds of thousands of independent hourly chronological simulations of any system. The results of the model deliver a full distribution of expected reliability events and their costs. This allows system planners to mitigate reliability concerns and economically plan the expansion of their system.
For more details, contact CEI at (858) 566 - 0221 or email us at Info@CEInsight.com. We can provide online demonstrations and address any specific questions you have. 
Typical Studies 
Unique Features of SERVM
Reserve Margin Study
A primary use of SERVM by our clients is to aid them in defining the optimal planning reserve margin given its system. Given that the shedding of firm load can have extraordinary consequences for utilities and the hundreds of millions of dollars of cost to build additional capacity reserves, it is prudent for a utility to economically justify its planning reserve margin for its customers and its regulators. Depending on a utility’s historical unit outage information, limited energy resources, typical loadshape, and load forecast error, finding this optimal reserve margin for a utility can be very complex. 
SERVM allows users to balance capacity cost, unserved energy societal costs, reliability costs (costs above the marginal cost of a high heat rate gas CT), and emergency purchase costs. This graph can be created on the weighted average of all cases or at any confidence level. For instance, if you want to set a reserve target based on minimizing reliability risk for 95% of all cases, the information is reported by SERVM.   The model also allows users to do sensitivity analysis around the major drivers. 
Target Reserve Margin Graph
Capacity Benefit Margin Study
After performing a reserve margin study to set an optimum reserve margin, capacity benefit margins can be varied across ties to determine what CBM levels would cause a shift in the optimum reserve margin. This can be isolated to individual ties or consolidated across ties.
Seasonal Reliability Assessments
Using near-term load forecasts and capacity projections, a wide range of weather, economic growth, and unit outage scenarios can be modeled to determine what the relative risks are for upcoming seasons. The distribution of expected reliability purchases can be used to determine how much capacity should be purchased at what costs to minimize risk and total reliability costs.
Energy Limited/Non-Dispatchable Resource Valuation (Applies to all renewable energy resources)
From a base case simulation, two incremental units can be modeled separately. A CT with no restrictions and an energy limited resource (for example, a solar thermal plant). The CT will produce some amount of reliability cost savings (not measuring production cost). In the other case, the solar unit will produce some savings as well but because of the limitations, the reliability cost savings will be lower. This will demonstrate the capacity worth of the resource relative to a CT. This can also be performed with wind, hydro and other energy limited resources. (The graph is merely illustrative and not in any way indicative of Astrape’s assumption of the capacity value of any actual hydro resource)
Energy Limited Resource Valuation


Demand Side Option Valuation
Similarly demand side options can be valued with completely different sets of restrictions from how physical resources are limited. Currently the model can simulate the following restrictions for demand side options: hours per day, days per week, hours per year, hours per call, market price threshold for calling, and response time. Other restrictions can also possibly be handled. This can demonstrate the relative value that different contracts with different restrictions might provide.
Capacity Worth Study
SERVM allows users to evaluating the load shapes of new potential customers and determine the required capacity addition due to that customer. This is useful for clients in competitive markets for large customers. The same capacity worth study will develop monthly capacity values by hour for the peak day, average week day, and average weekend day which can assist in structuring PPAs with capacity payments spread according to the company’s capacity worth schedule. This will in turn give counterparties incentive to maximize availability in the periods when the capacity is most valuable to the company.
Interruptible Call Summary
SERVM clients can produce distributions of estimated interruptible contract calls by year. This can be a powerful tool in marketing Interruptible programs to new customers and informing existing customers what they can expect for upcoming seasons.
Internal Transmission Studies
SERVM allows users to model internal transmission constraints and possible mitigation techniques. For instance, if a particular area has an export limitation, SERVM can evaluate the reliability impact of increasing that export limitation. The value that increasing the limitation brings can be compared against the capital cost of the transmission upgrade.
EFOR Improvement Sensitivity
What capacity value does an improvement in EFOR provide? Can the reserve margin target be lowered with a better EFOR?
Fuel Backup Studies
How much combustion turbine capacity needs to have dual fuel capability in the event of pipeline disruptions or reduced gas availability?
  • Fast hourly chronological simulation (8760 hour simulation with 1000+ generators and 6 interconnected areas performed in < 1 second)
  • A full distribution of weather years, load forecast errors, and unit performance draws comprising >100,000 iterations can be performed on a few connected workstations in < 1 hour.
  • Advanced market model which calculates hourly the generation availability, transmission availability, and market price of energy of interconnected areas.
  • Resource modeling:
    • Economic dispatch considering minimum uptimes, downtimes, startup times, startup costs, fuel costs, fuel availability, heat rates, energy limitations, market availability of resources
    • Monte Carlo frequency and duration unit performance simulation which takes into consideration a distribution of time to failure, time to repair, partial outage time to failure, time to repair, startup probability, startup failure repair times, maintenance outages, planned outages.
    • Exceptional hydro dispatching flexibility including constant minimum flow requirements, daily minimum flow requirements, weekly minimum flow requirements, weekly and hourly economic dispatch, and hourly emergency dispatch. Economic dispatching of pumped storage hydro also available.
    • Powerful energy limited modeling for wind, solar, biomass, and other renewable resources. Historical weather information can be provided on a site-by-site basis to model the probabilistic contribution that such resources will make to the reliability of the system.
    • Demand side options can be modeled with hours per day, days per week, hours per year, economic dispatch thresholds, reliability thresholds.
    • The dispatch of emergency operating procedures can be simulated explicitly to match varying dispatch rules during different reliability situations.
  • Fuel availability can be modeled separately for each unit. Separate logic can be utilized for primary and secondary fuels for dual fuel units based on fuel types.
  • Energy payback can be modeled for demand side resources and loss of load events.
  • Societal costs of unserved energy can be estimated based on magnitude, frequency and duration of events.
  • Automated sensitivities to evaluate changes in unit performance, transmission availability, neighboring generation availability, market price, unserved energy costs.
  • Metrics available from a granularity of total study weighted Loss of Load Probability to iteration specific and hour specific unit performance. All output can be exported to csv format.