Demand Forecasting and Aggregate Planning in the Electrical Supply Industry

A simulation study of the importance of the choice of demand forecasting method in the aggregate capacity planning of the UK electricity supply industry is reported. Using a financial performance measure rather than the conventional measures of accuracy, some of the univariate or extrapolative forecasting methods employed were found to perform surprisingly well over a six year time horizon, suggesting that such methods may merit a greater role in aggregate capacity planning than they appear to be accorded in current practice.