Posted: 2020-07-1601:04 AM. Last Modified: 2021-10-2812:26 AM
Why Utilities Are Using AI Digital Solutions to Reinvent the Science of Price Forecasting?
As the energy marketplace has grown more complex, energy producers, grid operators, and consumers require more intelligence and faster data analysis to interpret pricing patterns. Producers need to know how and when to maximize their energy output during times of the day and week when pricing will work the most to their advantage. Consumers need to accurately perform short-term forecasts of both their consumption and pricing to optimize their purchasing power.
This blog post (Part 2) highlights some of the advantages utilities and other energy stakeholders can accrue when they deploy an AI-driven forecasting digital solutionsmodel.
When compared to classic mathematical forecasting models, automated AI models can forecast consumption and production with 20 percent to 30 percent more precision – which leads to direct bottom line savings. In addition, field studies also determine that AI models prevent more large errors than do classic models.
Unique Abilities of AI Digital Solutions Tools Act as Accurate Differentiators
We at Predictive Layer, a Schneider Electric Energy Management Technology Partner, have developed an AI system to help large enterprises, traditional utilities, and producers of renewable energy resources to better forecast energy consumption and pricing so that customers can save money through smarter energy choices.
Listed below are some of the reasons why energy stakeholders are investing in such AI-driven forecasting digital solutions:
Many countries today have created their own specific energy demand, supply, and pricing rules. Besides providing energy supply and demand forecasting, AI tools also can learn the unique characteristics of the pricing models of each of these local markets. People who understand these local pricing models are very difficult to replace when they retire. The AI model provides an insurance policy that pricing knowledge is retained and put to good use.
Access to a richer data pool
AI models directly access multiple sources of information, including Transmission System Operator (TSO) energy balancing reference information, multiple weather forecasts, pricing alerts, market prices published in real time, published client activity plans (e.g., vacations, holidays, major events) and any published signals on open platform forums like Schneider Electric Exchange. This collection of data enables unique precision and provides stakeholders with enough response time to adjust to marketplace changes.
AI models consider all the variables at play and propose the best purchase or trade plan for the upcoming weeks, months, and quarters. This enables savings of 5% to 10% when compared to exercising a standard purchase plan approach. These gains are possible because the machine learning aspects of the AI tool recompute models and automatically adapt to new patterns in the marketplace much faster and much more accurately than a human remodeling, especially, if the individual has to manage multiple forecasts simultaneously.
AI models are constantly self-monitoring the health and accuracy of their own forecasting model. They also suggest the integration of additional inputs that can continue to sharpen the accuracy of the model thereby further reducing risk for error as time goes on.
Organizations that have deployed our AI solution in the field over the last 18 months have developed enough confidence in the tool that they now rely on it as their main resource for pricing-related decisions. Only automated alerts surrounding anomalies are sent to a human manager. Such automation allows the forecasting team to be freed up to both further scale their forecasting systems and to build in more resilience to enable the servicing of new opportunities.
Oliver Cognet, CEO, Predictive Layer, is a business leader, corporate developer, and entrepreneur. He has 25+ years of experience in High Tech, Software Development, and Telecom markets focusing on enterprise and consumer markets. Mr. Cognet knows that technology and innovation can help businesses better understand the behavior and needs of consumers, thus helping businesses to grow. Predictive Layer brings the full power of machine learning artificial intelligence (AI) to businesses so they can simply and intuitively model and establish forecasts and predictive analytics of their key target indicators.