Olumide Adisa (Ph.D) Gas Market Modeller PLEXOS® Integrated Energy Model: Modelling the Impact of LNG Demand on the East Coast Gas Market Olumide Adisa (Ph.D) Gas Market Modeller March 2014

Energy Exemplar® Commercial since 1999 Focused on PLEXOS® for Energy Systems Software Global client base served from four locations: Adelaide, Australia London, United Kingdom Johannesburg, South Africa Sacramento, CA, USA West Coast Hartford, CT, USA East Coast 20% staff with Ph.D. level qualifications spanning Operations Research, Electrical Engineering, Economics, Mathematics and Statistics Client base growing 30% p.a.

Client Map Worldwide installations of PLEXOS exceed 1060 at more than 175 sites worldwide in 37 countries. Users: Power Generation Companies, Transmission System Operators (TSOs), Independent System Operators (ISOs), Electricity and Gas Market Operators, Energy Commission and Regulators, Price Forecasting Agencies, Power Plant Manufacturers, Consultants, Analysts, Academics & Research Institutions

Analysis tools in PLEXOS® What makes PLEXOS® engine so powerful? MODELING FLEXIBILITY EFFICIENCY SIMULATION ALTERNATIVES ADVANCED CAPABILITIES Power market design: Ireland, Australia, New Zealand, UK, CAISO, MISO, Singapore, Chile Cutting edge technology: .Net Framework 4.0 and XML Built-in functions and solving methods. Optimization: Xpress, CPLEX, Gurobi, Mosek Simulator Features: Long, medium and short term Stochastic and deterministic optimization Analysis Capabilities: Cost-based analysis Simulate competitive behaviour Co-optimization of resources and services Profit Maximization Integrated Transmission and Hydro

Portfolio Optimization Features: Overview Generation Markets Transmission Visualization Renewables Financials Gas Modelling Timeframes Stochastic DSM Portfolio Optimization Customizations

PLEXOS Features Energy Exemplar Generation Optimal capacity expansion Unit commitment Heat rate model Maintenance optimization Monte Carlo simulation Fuel constraints Emission constraints Technical limits Auxiliary use Ancillary services CCGT & CHP SCUC (Contingency) Transmission Radial and meshed networks Regional pricing Nodal pricing Large-scale networks AC & DC Interface limits Losses (regional & zonal) LMP decomposition Wheeling charges Pricing methods Contingencies and SC-OPF SCUC (Contingency) ISO level outputs Transformers Phase shifters Interfaces Renewables All types Energy constraints Must-run limits External profiles Cascading Hydro Pumped Storage Uncertainty Demand Bidding & Participation Energy Ancillary Services Interruptible loads Financials Financial contracts CfD & FTR Generator bid formation Gaming models Pricing and Uplift Escalators Markets & Portfolio Optimisation Energy Ancillary Services Heat Fuel Capacity Visualisation Geospatial Pre-set results graphs Google Earth Integrated Gas Modelling Basins Fields Storage Pipeline External gas markets Optimal capacity expansion Transmission constraints Peak shaving services Linepack optimization Demand forecasting Production constraints Nodal processing Demand bids and quantity Production cost tranches Gas contracts Pipeline de-rating Gas Model Planned Features LNG shipment optimization modelling Stochastic Variable inputs Correlations Stochastic optimization Monte Carlo Box-Jenkins methods Brownian with mean reversion Timeframes 1-minute to 10’s of years Constraint decomposition LDC model Chronological model Time Slices Customizations Generic constraints Open PLEXOS Automation Data retrieval Energy Exemplar

PLEXOS Scope

PLEXOS Simulator Structure 10 + year studies Build & Retire Production & Transmission Captures Production Contracts Long Term Optimal Investment Optimal Maintenance Scheduling Medium Term Decomposition Short Term Chronological

PLEXOS Simulator Structure Long Term Optimal Investment Schedules maintenance Models forced outages Computes LOLP, optimal reserve levels etc Optimal Maintenance Scheduling Medium Term Decomposition Short Term Chronological

PLEXOS Simulator Structure Long Term Optimal Investment Optimal Maintenance Scheduling Breaks down constraints Optimises constraints in storages, fields etc Fast results for MT studies Medium Term Decomposition Short Term Chronological

PLEXOS Simulator Structure Long Term Optimal Investment Optimal Maintenance Scheduling Chronological optimisation in each ST period Emulates market clearing engines Captures competitive behaviour eg Nash-Cournot Medium Term Decomposition Short Term Chronological

PLEXOS® Integrated Energy Model Modelling the Impact of LNG Demand on the East Coast Gas Market Case Study: NSW

Key PLEXOS® Gas Module Interface Classes Energy Exemplar

Study topology and assumptions SA QLD NSW VIC TAS SEA gas Pipeline MSP Pipeline Eastern gas pipeline Tasmanian gas pipeline QSN Link Maximization of social welfare by taking a least-cost modelling approach. Perfectly competitive market – no market power of participants LNG netback price of $13/GJ in QLD LNG demand - 6 trains totalling 1518PJ/Year by 2023 New build variables for CSG development in NSW Production and transmission constraints from AEMO GSOO 2013 Published AEMO natural gas load used Energy Exemplar

Results Energy Exemplar

Results Energy Exemplar

Conclusion – Where/how does optimization fit in our market? LT Modelling MT Modelling Resource Management for gas prices Resource Allocation and Planning Contract Portfolio and Swing Optimization ST Modelling Demand Side Management Peak Demand Shaving Shortage Curtailment Maintenance Maintenance Planning Optimal Out-of-Service Units Management Optimal investment planning Cost savings on portfolio in the long term Subsurface – surface – Market; Forecasting for short, medium and long term; Integrated Asset Modelling – gas delivery network, subsurface reservoir model, production optimization algorithm. PLEXOS can provide full optionality from surface -> Market Energy Exemplar

Energy Exemplar