Argonne National Laboratory (ANL) developed the Electricity Market Complex Adaptive System (EMCAS) software to meet the growing need for advanced modeling approaches that simulate how electricity markets evolve over time and how participants in these markets may react to the changing physical, economic and regulatory environments in which they operate.

Electricity markets around the world are changing. The traditional vertically integrated electric utility that operated as a regulated monopoly controlling all aspects of electricity service is giving way to new organizational structures (e.g., generation companies, transmission companies, system operator, and regulator). Traditional modeling techniques using global optimization approaches and equilibrium analysis have shown to be inadequate to deal with the new deregulated electricity markets due to their inability to account for the different objectives, risk preferences, and behavior of the various market participants.

The EMCAS software allows users to represent multiple market participants, each with unique bidding strategies and decision processes. In addition, the software can model the transmission system in detail sufficient to identify congestion and associated price impacts, and track hourly bid-based market clearing prices in both day-ahead and real-time markets. Thus, EMCAS provides advanced analytics that can be used to more accurately model and better understand the behavior of electricity market participants in order to meet the needs of:

• Federal and state regulators—to test regulatory structures before they are applied to real systems, thus limiting the exposure of consumers to potentially substantial price spikes
• Electricity suppliers—to analyze alternative trading strategies and business practices when deciding on how best to manage their portfolio of assets
• Financial institutions—to have a clear understanding of expected revenues from merchant power plants in order to make sound investment decisions
• Electricity generation companies, transmission companies, and industrial consumers—to improve their competitiveness in the evolving marketplace.

The EMCAS software provides unique and valuable insights for bid strategy evaluation, contract and portfolio optimization, price risk analysis, competitor analysis, investment planning, and market design and monitoring.

ADICA Consulting, LLC (ADICA) signed a Software License Agreement with ANL before a commercial version of the software was ready for distribution. ADICA then began marketing through an informative website, strategic alliances with other consulting groups, and international power system professionals. By the time the initial commercial version of the software was ready, ADICA had four clients ready to purchase it.

ADICA has demonstrated an unusual commitment and initiative in marketing and developing the software. For example, ADICA convinced an electric utility company, a transmission company, and a regulatory agency in Europe to jointly fund a $500,000 project to model and analyze the Iberian electricity market. This project included a subcontract for ANL to develop and integrate a hydroelectric module for EMCAS. In support of this effort, ADICA played an important role in resolving differences in payment policies and business practices between the customers (payment after the project is completed) and the laboratory (payment in advance for the laboratory's best effort).

ADICA was instrumental in stimulating the Korea Power Exchange's (KPX) interest in EMCAS and working with KPX senior management to define the technical content for a Memorandum of Understanding (MOU) between KPX and ANL to promote cooperation between the two organizations on research and development in the area of electricity market analysis. ADICA also approached Platts, the world's leading provider of energy information, in an attempt to bundle its electricity system databases with EMCAS to reduce the cost and time required to customize EMCAS for use by new clients.

In 2006, a consortium comprised of a system operator (OTE), regulator (ERU), transmission company (CEPS), and Ministry (MI&T) in the Czech Republic hired an independent consulting firm (Deloitte) to conduct a survey of commercially available software for electricity market simulation. The consortium selected EMCAS as the top pick for its Strategic Regional Electricity Model.

At the FLC's Midwest/Southeast joint regional meeting in Nashville, Tennessee, Bruce Hamilton received the FLC Midwest Region 2006 Partnership Award for ADICA's outstanding work transferring the EMCAS software technology to the commercial marketplace. Since the initial EMCAS product launch in August 2005, the software has been licensed for use by a wide spectrum of clients (e.g., electric utility, transmission company, regulatory agency, research center and university) in Asia, Europe and North America.