What It Takes

Balancing supply and demand

Every day, using the laws of supply and demand, OPPD provides customers with the electricity they need.

How this happens is a remarkable feat led by a little-noticed, but crucial, team in a fast-paced and high-stakes job.

Energy marketers participate in the market that ensures reliable, affordable power for people in OPPD’s service territory and far beyond. Their role is more important than ever as OPPD expands and diversifies its generation fleet to meet new demand for electricity.

“The job is always changing,” said Chris Campos, a day-ahead energy marketer. “It doesn’t get boring. There’s always something new going on.”

Energy markets are regional organizations, designed to match customer demand for electricity with the generation sources that utilities have readily available to ensure reliable power, adequate transmission and competitive wholesale electricity prices.

OPPD is part of a larger, multistate network, known as the Southwest Power Pool (SPP), that coordinates the markets in all or parts of 14 states, from Montana to Texas.

Around the clock

Twenty-four hours a day, 365 days a year, OPPD’s energy marketing team checks which OPPD generation sources are available to run. Are coal-fired units online, or are some down for maintenance? What about natural gas? Does the weather forecast call for a steady breeze that could power wind turbines? Or freezing drizzle that might render them inoperable?

All of these factors, and hundreds of others, feed into a strategy that OPPD submits to the SPP marketplace with the total number of megawatts the utility expects to generate the following day and the forecasted customer load.

“The strategies we use are constantly evolving as new generation and transmission lines affect the way power flows,” said Ryan Murphy, a day-ahead energy marketer.

Supply and demand

And what if OPPD needs some extra power?

Enter the market, a solution that directs power where it’s needed using wholesale price incentives, with an emphasis on reliability and optimizing the transmission system.

Like other utilities, OPPD sometimes produces more power than its customers need (known as being “long” in the market). The SPP market allows utilities to sell that electrical generation to other members who need it. OPPD can buy generation as well (being “short”) when doing so is financially smart.

Once all utilities have submitted their available generation and forecasted customer demand, the SPP market engine ranks each one based on its cost to operate. The cheapest options are dispatched first to keep costs as low as possible, followed by the next cheapest, and so on. Throughout the process, system reliability is foremost.

The market “clears” when the amount of electricity dispatched matches the amount needed (known as load).

Different sources

Not all generation sources are equal.

Wind generation is the one of the first to be dispatched because its marginal cost of fuel is zero. But the technology varies across different times of the day, seasons and changing weather.

Coal generation runs consistently thanks to a steady fuel supply and its reliability in most cases, but it’s also more expensive because utilities have to buy coal to keep units running. Coal units also need more time to ramp up and can only drop their production so low without going offline.

Natural gas and fuel oil are dependable as well, but subject to price swings based on the availability of those fuels, public demand and weather.

The diversity of generation technology and fuel sources helps OPPD optimize in the market and deliver reliable, affordable and environmentally sensitive power to customers.

Maintaining balance

Operational costs aren’t the only factors guiding which generation to dispatch. Sometimes, too much energy produced and a lack of energy demand will send signals in the market. Because electricity is only valuable if customers can use it, prices may decline. If they fall below the cost of generating that electricity, the market may signal that local utilities should scale back production and replace it with more economical energy from the market to save money.

When demand for electricity increases and more generation is needed, prices may rise and as more expensive generation is required to solve supply and demand. Balance is restored.

“There are thousands of variables and you’re trying to keep an eye on all of them,” Campos said. “You use the levers that you have to mitigate risk and maximize your portfolio, based on the data you have and what you’re seeing in real time.”

Two markets

SPP runs two energy markets: day-ahead and real-time.

The day-ahead market is based on forecasted load and generation available for the next day and is only open the prior morning, with results posting early enough that utilities can prepare.

The remaining transactions take place in a real-time market, which balances short-term load changes with available generation, all with a focus on system reliability.

Day-ahead energy marketers

Day-head energy marketers examine available generation, energy needs and numerous other factors to set up the market strategy for the next day.

Imagine a football coach planning a strategy for the next day’s game. What are the opposing team’s strengths and weaknesses? Does the team tend to run the ball more, or pass? How strong is their defense?

In energy marketing terms: Will a cold storm front blow through Omaha on a hot summer day, reducing the need for air conditioning and demand for electricity? Will crypto-mining businesses in North Dakota suck up a lot of power in that area, creating more demand, higher prices and an opportunity for OPPD to sell excess energy to that region?

“We’re always trying to create the best game plan,” said Brad Josoff, a senior energy marketer. “It’s like there’s always a football game the next day that we’re trying to prepare for.”

Joel Robles, a senior energy coordinator for NERC Compliance & Training, said buying energy a day ahead is often safer because you can lock in your costs ahead of time. Real-time prices tend to be much more volatile and unpredictable. But sometimes, other strategies make more sense.

“It just depends on supply and demand,” Robles said.

Real time

Real-time energy marketers respond to market conditions, 24 hours a day, year-round.

Imagine a football coach evaluating a game as it happens and calling plays when things don’t go as planned. Maybe a quarterback gets injured, or the other team’s defense performs better than expected.

Like the coach, real-time energy marketers take steps to adjust to their current situation – and the stakes are high. Every day, millions of dollars flow through energy markets as utilities buy and sell power to meet their needs. Hedging is key, and OPPD has strong safeguards in place to manage risks.

Still, the job requires the experience and confidence to act decisively under pressure.

“If something bad happens in the middle of the day, you have 20 other people to bounce an idea off of,” Campos said. “At 2 in the morning, it’s just you. You have to be comfortable making major decisions with no one else around.”

Energy marketers talk constantly with OPPD’s plant personnel and the Southwest Power Pool to ensure everyone’s needs are met. In a highly secure office with direct lines to OPPD power plants, they optimize OPPD’s generation output based on the utility’s – and customers’ – best interests.

“At the end of the day, nothing is guaranteed,” said Grant Ahern, a real-time energy marketer. “You go with your intuition and your experience from past events. You use the data you’ve got and then make the most educated decision possible, based on that data.”

A diverse team

OPPD’s energy marketers come from diverse backgrounds: former plant workers, information technology specialists, accountants, engineers and others. Training is rigorous so they can handle the many responsibilities of energy marketing.

With the current group, everyone brings something to the table.

Josoff, a former instrument control technician with stints at OPPD’s Nebraska City and Cass County Stations, knows from experience how quickly plant specialists can fix a broken part.

Murphy and Campos, with their IT backgrounds, are masters of parsing data. Ahern, with experience coordinating trains at Union Pacific, thrives in a world of fast-paced, high-stakes decisions. Robles is a seasoned trainer with extensive knowledge of the markets and OPPD’s procedures.

Facing challenges

Plant personnel look for guidance from energy marketing as well. If a unit needs maintenance, can it go offline without affecting OPPD’s needs or the broader market? Careful coordination and collaboration are essential for a reliable, optimized system.

Factoring different kinds of generation into predictions is challenging, as well. Wind tends to produce more power overnight and less during the day. But not always. In freezing weather or cold fog, ice may form on wind turbines and render them temporarily inoperable. Flooding or low water levels on the Missouri River may require adjustments at OPPD’s coal plants.

If a unit goes offline unexpectedly, the market loses those megawatts. With less supply and the same demand, prices may rise if the next generation needed is more expensive to dispatch. Without that power, OPPD has to acquire energy from somewhere else, either from a different unit or from the market.

Murphy said he used to research every variable exhaustively until he realized he had to make decisions sooner, using the best data available and input from his coworkers.

“You have to be a strong decision maker and you have to be confident,” he said. “It’s a skill, and you develop it.”