Section 1: Introduction and motivation should describe the problem and motivate its importance.

Definitions: “Operational” is any electricity from the grid consumed by residential, commercial or industrial
consumers. Including electricity lost due to inefficiencies in transmission. It excludes electricity the consumer may
have generated through their own means e.g. from solar panels.
“Consumption” is the amount of energy used per hour (MWh).
“Demand” is the total energy consumed at a certain time.
Problem and motivation: It is assumed electricity powers the luxuries and necessities of modern consumer life.
Hence, consumers place high utility on hindered access to electricity. Simply put, a monetary cost is suffered when
consumers don’t receive electricity (this case references the under production of electricity).
Electricity cannot be stored and released on demand. Thus, over production of electricity is a cost that generates no
revenue. However, this cost is generally lower than the cost of not generating enough electricity.
Ideally, we only ever produce as much electricity as demand. However, this is unrealistic to accomplish. We
can minimise the cost, as noted above, by generating as close to this “true” demand as possible. The main
problem we aim to solve is the forecasting of the total consumer demand at certain discrete future day and time.

Section 2: Literature Review surveys the related work you have found in the literature.
Industry methods to determine Demand
AEMO:
Currently, the most utilised methodology in Australia to forecast electricity is developed by AEMO based on a linear
regression model with ordinary least squares to estimate coefficients. To ensure the accuracy of the data,
AEMO does a cross-section between multiple reputable sources such as the ABS and CSIRO.
The AEMO splits their forecasting model based on a short-term forecast, known as the base-year forecast and the
long-term forecasts which launch off base year forecasts.
Short-Term:
The linear model includes the variables of the previous electrical consumptions, cold or hot temperature, whether it
was a workday or not.
This is a more basic model based on linear regression that would give out a consistent forecast and a good starting
point for more complex models. The nonlinear elements don’t affect the accuracy too much as there is a huge
amount of data to help create a better fit. However, the model is seriously affected by the outliers as its sensitive to
presence of unusual data points which is present within the ever-changing and unpredictable nature of electricity
demand.
An improvement on this could be adding more variables like potentially GDP, regions, or adding a separate gauge
based upon consumption peaks to better adjust to possible peaks.
Long-Term:
To obtain a starting point for long-term forecasting, the forecasts are divided into different sectors based on
separate industries, as this will allow more accurate results. However, this model will have even more problems from
the potential inclusion of outliers and over a period of long time, say twenty years the possible margin of error will
increase more and more.
Pattern Recognition for Peak Prediction of Electrical Consumption:
A certain value is classified as the set ‘bar’ to identify whether a point is considered a peak or not. This is then used
to train data in different methods to either get more consistent peaks, help predict certain outliers, follow a more
cyclic pattern which used together can predict about 80% of the peaks.
Neural Networks:
Neural networks offer the potential to overcome the reliance on a functional form of a forecasting model. Using a
feed-forward type neural network, it can quickly output and input linear functions through each iteration, allowing it
to quickly adjust and use less iterations. However, the overall training time and time to setup the network still
requires an extended period of time to become fully functional.

Section 3: Software and data description should describe the data and the software you intend to use.
The data is initially presented as an excel spreadsheet containing date (from 1/01/1999 0:30 to 4/05/2010 using 30-
minute intervals.), region and total demand for the corresponding region. In a separate excel file we received the
temperature (°C) for a certain region at a certain date (measured at discrete locations). We plan to use the following
data: date (in 30-minute intervals), total demand, temperature, location.
We plan to reserve and use the most recent years’ data (2010) to evaluate our forecasts and models. While the
remainder of the data will be used to produce the model and forecast.
Software
We will be converting the existing excel files to tab delimited files through MS Excels’ existing file conversion
system.
We plan to estimate the models using programming in python (Jupyter) and through accessing existing python
statistics libraries. We plan to use the statsmodels library. To estimate and test the following models: SARIMA
(seasonal autoregressive integrated moving average), Exponential Smoothing.
In order to fit the assumptions of certain models we plan to transform the data using the above library to meet the
model assumptions.
When producing the linear regression model. We plan to use the following python packages NumPy, scikit-learn (for
machine learning).
It is our aim to use Markov Chain Monte Carlos methods to produce an approximate distribution and use this to
forecast. We will be applying the following python package: pymc3.

Section 4: Activities and schedule lists the main project activities and create a timetable for the activities.
Main Project activities
1. Clean the Data. Merge it.
2. For each intended modelling technique create a set of candidate models.
3. Run simulations for each model to select the best model from each modelling technique/methods.
4. Run simulations to select the best model.
5. Diagnostic testing to attempt to improve the model and fix any issues with it.
6. Write up a report
Timetable:
 Week 3: Clean the Data. Merge it.
 Week 4-7: Produce [SPECIFIC] models. Run simulations on the model to test them. Apply Diagnostic test and
fix any issues.
 Week 8-9: Choose best model. Improve it and address any criticisms to model.
 Week 10: write up report
Use a simple gauge to constantly test out models each year based on the AEMO forecasting system and compare
with their forecast model results. If the model results in a substantially large MPE take a further look into that year
for possible reasons that might be affecting the model like certain sectors differentiating a lot.
𝑚𝑒𝑎𝑛 𝑝𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝑒𝑟𝑟𝑜𝑟 = (𝑎𝑐𝑡𝑢𝑎𝑙𝐹𝑌𝐸 − 𝑓𝑜𝑟𝑒𝑐𝑎𝑠𝑡𝐹𝑌𝐸) /𝑎𝑐𝑡𝑢𝑎𝑙𝐹𝑌𝐸 × 100
A more complicated gauge could be using a combination of metrics such as looking at the Quantile scoring, K-S
statistic, mean absolute excess probability (MAEP) to create a fuller picture.

Section 5: References
AEMO 2018, Definitions, AEMO, viewed 21 2019 June, <https://www.aemo.com.au/-
/media/Files/Electricity/NEM/Planning_and_Forecasting/Demand-Forecasts/EFI/2018/Operational-Consumption-
definition---2018-update.pdf>
Morten Goodwin and Anis Yazidi, IFIP International Federation for Information Processing 2014, A Pattern
Recognition Approach for Peak Prediction of Electrical Consumption, viewed 21 2019
June, https://link.springer.com/content/pdf/10.1007%2F978-3-662-44654-6_26.pdf
Jason Brownlee 2018, A Gentle Introduction to SARIMA for Time Series Forecasting in Python, Machine Learning
Mastery, viewed 21 2019 June, < https://machinelearningmastery.com/sarima-for-time-series-forecasting-in-
python/>
Ehab E. Elattar, John (Yannis) Goulermas, and Q. H. Wu, "Electric Load Forecasting Based on Locally Weighted
Support Vector Regression,” IEEE Trans. On Systems, Man, and Cybernetics, Part-C:
Y. Chakhchoukh, P. Panciatici, L. Mili,. L.Willis, “Electric Load Forecasting based on Statistical Robust Method," IEEE
Transaction on Power System, Vol. 26, issue 3, pp. 982-991, 2011
AEMC 2018, Forecasting Accuracy Report 2017, Viewed 21 2019 June,
https://www.aemc.gov.au/sites/default/files/content//FORECAST-ACCURACY-REPORT-2017-
final.pdf?fbclid=IwAR10dGuBueV0vvHbqg-GcdhNIHGFPwtv-z8U6zbHnLgf1CkjsDdWp6kVWBE
A.E. Clements, A.S. Hurn and Z. Li, Forecasting day-ahead electricity load using a multiple equation time series
approach, viewed 21 2019 June,
http://www.ncer.edu.au/papers/documents/WP103R.pdf?fbclid=IwAR2JPqU_Ak0vyqkxboHmd6OSJgph1eSxdxxH6N
G7NXtyzJUEwUJyD65jJC8