Challenges of electricity market modelling: GAMS vs. PLEXOS

Summary

While both GAMS and PLEXOS are broadly used for electricity market modelling, they each present their own set of challenges. Success in modelling electricity markets requires a deep understanding of the market and its underlying economics, as well as the ability to work with complex data and models.

Both GAMS and PLEXOS are powerful tools for modelling electricity markets, but each has its own set of challenges: model development, time, user-friendly interface, cost, maintenance and many more.

GAMS (General Algebraic Modelling System)

Electricity market modelling in GAMS (General Algebraic Modelling System) offers several benefits, including:

1. Flexibility: GAMS provides a flexible platform for modelling complex electricity market systems. It can be used to model a range of different market structures, including energy-only markets, capacity markets, and transmission-constrained markets.
2. Optimization: powerful optimization tools that can be used to find the optimal solution for complex electricity market problems. It can help market participants make informed decisions about the optimal dispatch of generation, transmission, and demand-side resources.
3. Transparency: models are highly transparent, allowing users to see the assumptions and inputs that are used to generate the results. This can be particularly important in regulatory settings where transparency is important to ensure fair and equitable outcomes.
4. Scenario analysis: it can be used to perform scenario analysis, allowing market participants to explore the impact of different market conditions and policy scenarios on the electricity system. This can help stakeholders to identify potential risks and opportunities and to develop effective strategies for managing these risks.
5. Cost savings: it can help to identify cost savings opportunities by optimizing the dispatch of generation and transmission resources. This can help to minimize the cost of electricity for consumers and improve the profitability of market participants.

A challenge in electricity market modelling in GAMS is that it can be time-consuming to build and maintain complex models. GAMS requires a high level of expertise in mathematical modelling and programming to build effective models. It can also be difficult to manage large data sets and incorporate new data as it becomes available.

PLEXOS

Electricity market modelling in PLEXOS offers several benefits, including:

1. Integrated modelling: it is specifically designed for electricity market modelling and provides an integrated platform for modelling generation, transmission, and demand-side resources. This can help to ensure that all aspects of the electricity system are modelled accurately and consistently.
2. Scalability: it is highly scalable and can be used to model large-scale electricity systems. This makes it a valuable tool for utilities, system operators, and regulators who need to model complex electricity systems.
3. Speed: it is optimized for speed, allowing users to perform complex electricity market simulations quickly and efficiently. This can help market participants to make faster and more informed decisions.
4. Visualization: it provides powerful visualization tools that can be used to display the results of electricity market simulations in a clear and understandable way. This can help stakeholders to communicate complex market information to a wide range of audiences.
5. Flexibility: it provides a flexible platform for modelling different market structures and policy scenarios. It can be used to model energy-only markets, capacity markets, and transmission-constrained markets, and can be used to explore the impact of different policy scenarios on the electricity system.

In contrast to GAMS, PLEXOS is designed specifically for electricity market modelling and includes a user-friendly interface that makes it easier to build and modify models. However, a challenge with PLEXOS is that it can be costly to purchase and maintain, particularly for small organizations or individuals.

Electricity market modelling regardless of the model you use

Main challenge with electricity market modelling in both GAMS and PLEXOS is the complexity of the models themselves. Electricity markets are highly complex and dynamic systems that involve many different stakeholders, including generator companies, transmission companies, regulators, and consumers. Modelling all of these factors accurately requires a detailed understanding of the market and its underlying economics, as well as the ability to incorporate data from a wide range of sources.

Additionally, electricity market modelling requires the ability to consider uncertainty and risk, as market conditions can change rapidly and unexpectedly. This requires sophisticated stochastic modelling techniques and the ability to incorporate real-time data as it becomes available.

Let me know in the comments your thoughts on both GAMS and PLEXOS.