Energy-intense production-inventory planning with participation in sequential energy markets

Markus Bohlayer, Markus Fleschutz, Marco Braun and Gregor Zöttl

Applied Energy, 2020, vol. 258, issue C

Abstract: To support the uprise of demand response, especially in the context of industrial processes, we propose a new approach to integrally determine the production-inventory plan and the cost-minimizing bids to participate in sequential reserve and energy-only markets. In particular, our approach considers time-coupling constraints which occur in the context of a production-inventory planning problem. We extend this problem with a comprehensive bidding formulation, which allows evaluating revenues and potential cost from the market participation, considering price uncertainties and uncertain activations of committed reserve capacity. This results in a multistage stochastic mixed-integer linear program, which explicitly considers the stage-wise revelation of information in our setup. To illustrate the capabilities of our approach, we apply our model to a real-world case study in which we investigate the participation of a cement plant in the German energy-only and reserve markets. The results of our case study indicate significant revenues for flexible industrial processes when participating in German spot and reserve markets.

Keywords: Demand side flexibility; Load management; Multi market bidding; Stochastic programming; Production planning; Demand response (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (8)

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DOI: 10.1016/j.apenergy.2019.113954

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