An Electricity Procurement Model with Energy and Peak Charges

A. B. Philpott and G. Pritchard
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A. B. Philpott: Department of Engineering Science, The University of Auckland, Private Bag 92019, Auckland, New Zealand
G. Pritchard: Department of Statistics, The University of Auckland, Private Bag 92019, Auckland, New Zealand

Chapter 14 in Stochastic Programming:Applications in Finance, Energy, Planning and Logistics, 2013, pp 399-419 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractWe describe a model developed to help minimize the energy procurement costs of a New Zealand process industry that is a high user of electricity. The model accounts for stochastic prices that depend on the hydrological state of the electricity system, as well as transmission charges that are incurred during coincident electricity peaks. We describe how these are modelled and derive a stochastic dynamic programming algorithm that is used to arrange production to meet demand while minimizing the expected costs of electricity procurement.

Keywords: Stochastic Programming; Optimization with Scenarios; Finance; Energy; Production and Logistics Applications (search for similar items in EconPapers)
Date: 2013
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