SimPower Introduction 1 - WordPress.com//simpower.cesim.com Learning goals Familiarise students with the whole decision-making environment for an electric utility; including sales,

On-line Business Simulation for Electric Utilities

Introduction

Ver 1.0

Cesim SimPower

http://simpower.cesim.com

What is Cesim SimPower?

SimPower is a web-based electric utility management simulation game that focuses on the dynamic market behaviour of the electricity markets. Participants work in teams and meet in direct competition against other teams.

SimPower combines the dynamics of electricity supply and demand and illustrates how customers and competitors influence the company’s business.

The participants experience how variations in the electricity market price (spot and forward prices) impact their profitability, how they should take those price variations into account when pricing to their own customers, what type of power plant to use in different market situations, how the value of long-term purchase and selling contracts are influenced by market prices.


Learning goals

Familiarise students with the whole decision-making environment for an electric utility; including sales, procurement, risk-management, financials, and their relationship with each other.

Develop capabilities in formulating, implementing, and adapting business strategies in a dynamic competitive environment over the course of several decision-making periods.

Enhance fact-based analytical decision-making and crystallise the financial implications of marketing decisions by linking thedecisions to cash flows and bottom line performance.

Give practical experiences in team-work and problem solving and excite competitive spirits in a dynamically evolving marketplace.


Learning Process

Applying new ideas

Analysis & planning

Observations & reflections

Results & team-work

Generalising from the

experience

Lectures & discussion

Concrete experience

Decision making


The simulation is completely web-based. There is no need to install any separate applications and the simulation can be accessed from any computer that has an internet connection.

The simulation platform allows team-members to work virtually if they wish. Each team-member has her/his own account that enables them to make decisions and scenarios on their own and later combine the outcomes with the other team-members on the [decision checklist] -page.

The platform also includes a communications forum that can be used to communicate within teams and between all teams in one market.

Web-based mode of operations


Simulation platform structure

The student interface of the platform includes the following pages:

[Home] - General info page with deadlines

[Decisions] - All decisions are made under ’Decisions’

[Results] - Results become available in this area after each deadline

[Schedule] - Simulation schedule is available on this page

[Teams] - Teams and team-members in your market can be viewed here

[Communications] - Access to discussion forums for team and market

[Readings] - Access to Decision-making instructions and case description


Each simulation market consists of 3-12 teams, with 2-5 members in each. The number of parallel simulation markets is not limited, making it possible to utilise the simulation forany number of students in the class.

All teams are starting from exactly the same position, with similar market shares and profits. Equally, teams will be faced with the same market conditions during the simulation.

It is notable that teams compete against other teams in their own market, not against a computer. Each team’s decisions influence the other teams’ results and the market development overall.

Simulation organisation


Decision making with the web interface

System calculates

the results automaticallyat the given deadline

Results from the previous round and

market info for the new round available

Analysis and

planning

Flow of Operations

Note that it is not possible to modify decisions after the round deadline. If team has not saved decisions for a round, the system will automatically use its previous round’s inputs.

IntroductionIntroductionPractice

Round

Practice

RoundStrategy and

Objectives

Strategy and

ObjectivesDecision -

making (x 5 – 12)

Decision -

making (x 5 – 12)Conclusion

and Analysis

Conclusion

and Analysis

After introduction, the teams

familiarise themselves with

decision-making via a practice

round. The practice round results

will not have any influence on the

actual game results.

The instructor decides the number of

actual decision-making rounds (5-

12) and decision-making follows

the cycle on the right.


The main objective for the teams is to deliver sustainable, profitable growth. Typically this is measured by a ratio called “cumulative total return to the shareholders”, which combines share price development and dividends paid to show the total return to the shareholders.

The share price calculation is based on the discounted cash flow method and for the most part the share price is affected by the level or earnings. In addition, the riskiness of the team’s electricity position, and the team’s decision-making track record over time have influence in the share price.

We recommend cumulative total return to shareholders due to its comprehensiveness. The instructor may, at her discretion, choose to use other criteria for the teams’ performance.

Main objective and winning crieria


Home page presents information about your team, approaching deadlines, previous

results, forum messages, as well as your team’s decision logs.

The on-line platform includes decision-

making, results, schedules, teams, readings, and communications forums.


SIMPower includes sales of electricity and district heat.

Electricity sales are done to different customer segments and participants make decisions about pricing and promotion.

District heat sales take place automatically depending on the company’s utilisation

co-generation power plants.

Decisions-section facilitates the participant’s

decision-making process. It allows testing different scenarios and gives information about previous year results, costs, competition etc.


Own production consists of two-types of power plants, co-generation plants that run with natural gas, and traditional plants that use coal.

Decisions regarding own production include: - steering of production

by season- investments- divestments- operational

improvements

electricity markets. Also eolic power is included.


Risk management includes electricity forwards.

Spot price fluctuation plays an important role in the simulation and the riskiness of operations is also taking into account in company valuation.


Financial statements show the overall

company results for this period and previous period.It contains income statement, balance sheet, and key financial indicators.


More information

Cesim OyArkadiankatu 21 A00100 Helsinki, FinlandTel. +358 9 406 [email protected]

Technical [email protected]

Documents

SimPower Introduction 1 - WordPress.com//simpower.cesim.com Learning goals Familiarise students with the whole decision-making environment for an electric utility; including sales,