Two Spectacular Use-cases of Mathematical Optimization In Energy Sector

A wind power plant in Czechia | Photo by Karsten Würth on Unsplash

Energy is a hot topic currently. Especially in Europe, we are fearing the upcoming winter – are we going to face blackouts? Are our houses going to be warm and cosy, as we’re used to?

It turns out that Mathematical Optimization has something to offer in the realm of energy and utilities.

Today, I’d like to show you how Mathematical Optimization-based algorithms help in the energy sectors of various countries.

Usually, they do it by stabilizing the power grid. But they can also generate monetary benefits for the owners of the power plants and grid operators. Read on to find out more.

Gaining $2.2bn in one year

One of the most astonishing success stories of Mathematical Optimization in the energy sector is the story of Midwest Independent Transmission System Operator Inc. (MISO) described here.

MISO manages one of the world’s largest real-time energy markets. They serve the electrical energy needs of more than 40 million end users.

MISO must ensure that energy generation and consumption are constantly balanced. To avoid capacity overload, they must be able to dispatch other power plants to meet high demand quickly. An energy management system must be robust enough to handle the failure of a power plant or transmission line, and not cause a cascading failure of other devices on the system.

Each day, MISO’s energy markets accept or reject offers and bids based on Mathematical Optimization-based algorithms.

The result?

Not only has the reliability and efficiency of power plants and transmission assets improved. Only in 2014, more than $2.2 billion in annual benefits were achieved. Through 2020, at least $6.1 to $8.1 billion of value was achieved. Impressive.

Increasing electricity production during winter months by 4.6%

Another famous success story of Mathematical Optimization (described here) is the story of an energy and chemical company, which was seeking to sell the excess production of its power plant in South Africa to the grid.

The power plant they are operating houses 18 gas engines. Each of them has very specific maintenance requirements. Unfortunately, one maintenance team is available.

To maximize the availability of engines (and the resulting profit), a Mathematical Optimization-based algorithm which schedules the maintenance periods for each engine was devised.

The result?

Electricity production during winter months increased by 4.6%. Moreover, the pressure on the grid eased during key months.



Mathematical Optimization can enable billions of dollars worth of benefits if applied smartly.

But also SMEs can benefit tangibly from its applications. Curious how?

Stay tuned!


P.S. A post to my blog would be incomplete without a reference to xkcd. Today, instead of a comic, I’d like to point you to this radiation chart. It will definitely help you better understand the risks associated with living close to a nuclear power plant.