Contents Forecasting….

From Power System Perspective

 Discuss Steps of forecasting.
 Discuss types of forecasting
methods
 Generate forecasts for data
using models
 Compute forecast accuracy
What is Forecasting?
 Process of predicting a future event
 Underlying basis of all business decisions
Need of Load Forecasting

Steps in the Forecasting Process

Load forecasting is a prerequisite for:

 Unit commitment
 Economic Dispatch
 Load Flow
Types of Forecasts
 Economic forecasts
 Technological forecasts
 Demand forecasts
Predict sales of existing products and services
Types of Load Forecasts

ACCURACY & DATA

 Electric load has an obvious correlation to
weather. The most important variables
responsible in load changes are:
 Dew point
 Humidity
 Wind Speed / Wind Direction
 Sky Cover
 Sunshine
 Temperature

Apparent load different between Christmas day

(the hour 121-145 in Ie figure) and other days.
Similar difference can be found in each year. Christmas Eve and 12/26 also different to
normal load curve.

Customer Class
Electric utilities usually serve different types of customers such as residential, commercial, and
industrial. The following graphs show the load behavior in the above classes by showing the amount
of peak load per customer, and the total energy.

Effects of Inaccurate/Poor Forecasting?

Types of Forecasting Models

1. Qualitative methods – judgmental methods

 Forecasts generated subjectively by the forecaster
 Educated guesses
2. Quantitative methods – based on mathematical modeling:
 Forecasts generated through mathematical modeling
1. Quantitative Methods
 Time Series Models:
 Causal Models or Associative Models
 Time-Series Forecasting
 Set of evenly spaced numerical data
 Obtained by observing response variable at regular time periods
 Moving Average Method
MA is a series of arithmetic means
ᾶ demand in previous n periods
Moving average = n
Moving Average Example
 MONTH ACTUAL SHED SALES 3-MONTH MOVING AVERAGE
January 10
February 12
March 13
April 16 (10 + 12 + 13)/3 = 11 2/3
May 19 (12 + 13 + 16)/3 = 13 2/3
June 23 (13 + 16 + 19)/3 = 16
July 26 (16 + 19 + 23)/3 = 19 1/3
August 30 (19 + 23 + 26)/3 = 22 2/3
September 28 (23 + 26 + 30)/3 = 26 1/3
October 18 (29 + 30 + 28)/3 = 28
November 16 (30 + 28 + 18)/3 = 25 1/3
December 14 (28 + 18 + 16)/3 = 20 2/3

Exponential Smoothing
New forecast = Last period’s forecast + ᾶ (Last period’s actual demand – Last period’s forecast)
Ft = Ft – t – 1 - Ft – 1)
where Ft = new forecast
Ft – 1 = previous period’s forecast
ᾶ = smoothing (or weighting) constant (0 ≤ ᾶ ≤ 1)
At – 1 = previous period’s actual demand
Choosing ᾶ
The objective is to obtain the most accurate forecast no matter the technique
We generally do this by selecting the model that gives us the lowest forecast error
Forecast error = Actual demand – Forecast value
= A t – Ft
Common Measures of Error
Mean Absolute Deviation (MAD)
ᾶ ǀactual - Forecastǀ
MAD =
n
Determining the MAD
ACTUAL TONNAGE FORECAST WITH
QUARTER UNLOADED
1 180 175 175
2 168 175.50 = 175.00 + .10(180 – 175) 177.50
3 159 174.75 = 175.50 + .10(168 – 175.50) 172.75
4 175 173.18 = 174.75 + .10(159 – 174.75) 165.88
5 190 173.36 = 173.18 + .10(175 – 173.18) 170.44
6 205 175.02 = 173.36 + .10(190 – 173.36) 180.22
7 180 178.02 = 175.02 + .10(205 – 175.02) 192.61
8 182 178.22 = 178.02 + .10(180 – 178.02) 186.30
9 ? 178.59 = 178.22 + .10(182 – 178.22) 184.15
 Determining the MAD
ACTUAL FORECAST ABSOLUTE FORECAST ABSOLUTE
QUARTER TONNAGE WITH DEVIATION WITH DEVIATION FOR a
UNLOADED FOR a = .10 = .50
1 180 175 5.00 175 5.00
2 168 175.50 7.50 177.50 9.50
3 159 174.75 15.75 172.75 13.75
4 175 173.18 1.82 165.88 9.12
5 190 173.36 16.64 170.44 19.56
6 205 175.02 29.98 180.22 24.78
7 180 178.02 1.98 192.61 12.61
8 182 178.22 3.78 186.30 4.30
Sum of absolute deviations: 82.45 98.62
Σ|Deviations|
MAD = 10.31 12.33
n
Common Measures of Error
Mean Squared Error (MSE)
ᾶ (Forecast errors)2
MSE =
n
Determining the MSE
ACTUAL TONNAGE FORECAST FOR
QUARTER (ERROR)2
UNLOADED
1 180 175 52 = 25
2 168 175.50 (–7.5)2 = 56.25
3 159 174.75 (–15.75)2 = 248.06
4 175 173.18 (1.82)2 = 3.31
5 190 173.36 (16.64)2 = 276.89
6 205 175.02 (29.98)2 = 898.80
7 180 178.02 (1.98)2 = 3.92
8 182 178.22 (3.78)2 = 14.29
Sum of errors squared = 1,526.52
ᾶ(Forecast errors)2
MSE = =
n
Common Measures of Error
Mean Absolute Percent Error (MAPE)
n
ǻ 100 ǀ Actuali ecasti / Actuali
i=1
MAPE =
n
Determining the MAPE

ACTUAL TONNAGE FORECAST FOR ABSOLUTE PERCENT ERROR

QUARTER
UNLOADED 100(ERROR/ACTUAL)

1 180 175.00 100(5/180) = 2.78%

2 168
3 159
4 175
5 190
6 205
7 180
8 182
å 𝑎𝑏𝑠𝑜𝑙𝑢𝑡𝑒 𝑝𝑒𝑟𝑠𝑒𝑛𝑡 𝐸𝑟𝑟𝑜𝑟
𝑀𝐴𝑃𝐸 =
𝑛 8
Comparison of Forecast Error
175.50 100(7.5/168) = 4.46%
174.75 100(15.75/159) = 9.90%
173.18 100(1.82/175) = 1.05%
173.36 100(16.64/190) = 8.76%
175.02 100(29.98/205) = 14.62%
178.02 100(1.98/180) = 1.10%
178.22 100(3.78/182) = 2.08%
Sum of % errors = 44.75%
44.75%
= = 5.59%
Exponential Smoothing with Trend Adjustment
When a trend is present, exponential smoothing must be modified
MONTH ACTUAL DEMAND FORECAST (Ft) FOR MONTHS 1 – 5
1 100 Ft = 100 (given)
2 200 Ft = F1 + – F1) = 100 + .4(100 – 100) = 100
3 300 – F2) = 100 + .4(200 – 100) = 140
4 400 – F3) = 140 + .4(300 – 140) = 204
5 500 – F4) = 204 + .4(400 – 204) = 282
Exponential Smoothing with Trend Adjustment

Exponential Smoothing with Trend Adjustment

Step 1: Compute Ft
Step 2: Compute Tt
Step 3: Calculate the forecast FITt = Ft + Tt
Exponential Smoothing with Trend Adjustment Example
MONTH (t) ACTUAL DEMAND (At) MONTH (t) ACTUAL DEMAND (At)
1 12 6 21
2 17 7 31
3 20 8 28
4 19 9 36
5 24 10 ?
α = .2 β = .4
Exponential Smoothing with Trend Adjustment Example
Exponential Smoothing with Trend Adjustment Example

Exponential Smoothing with Trend Adjustment Example

Exponential Smoothing with Trend Adjustment Example

Exponential Smoothing with Trend Adjustment Example

Trend Projections
Fitting a trend line to historical data points to project into the medium to long-range
Linear trends can be found using the least squares technique
ŷ = a + bx
where
ŷ = computed value of the variable to be predicted (dependent variable)
a = y-axis intercept
b = slope of the regression line
x = the independent variable
Equations to calculate the regression variables

Least Squares Example

 Do not predict time periods far beyond the database
Excel Environment
Associative Forecasting Associative Forecasting
Linear-Regression Analysis Multiple-Regression Analysis

Given historical data

Summary
 Three basic principles of forecasting are: forecasts are rarely perfect, and are more accurate in the
shorter term than longer time horizons.
 The forecasting process involves these steps: decide what to forecast, evaluate and analyze
appropriate data, select and test model, generate forecast, and monitor accuracy.
 Forecasting methods can be classified into two groups: qualitative and quantitative. Qualitative
methods are based on the subjective opinion of the forecaster and quantitative methods are based
on mathematical modeling.
 Time series models are based on the assumption that all information needed is contained in the
time series of data. Causal models assume that the variable being forecast is related to other
variables in the environment.
 Some forecast models used to forecast the level of a time series are: naïve, simple mean, simple
moving average, weighted moving average, and exponential smoothing. Separate models are used
to forecast trends and seasonality.
 A simple causal model is linear regression in which a straight-line relationship is modeled between
the variable we are forecasting and another variable in the environment. The correlation is used to
measure the strength of the linear relationship between these two variables.
 Measures of forecast error are considered while choosing method and parameters.