IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v322y2023i2d10.1007_s10479-023-05164-1.html
   My bibliography  Save this article

Electricity pricing, capacity, and predictive maintenance considering reliability

Author

Listed:
  • Yu-Chung Tsao

    (National Taiwan University of Science and Technology
    National Taiwan University of Science and Technology
    Asia University
    China Medical University Hospital, China Medical University)

  • Thuy-Linh Vu

    (National Taiwan University of Science and Technology
    National Taiwan University of Science and Technology)

Abstract

Operations and maintenance management for renewable energy (RE) projects has become increasingly important in improving energy system models’ precision. Specifically, some elements are uncertain and difficult to predict, such as temperature conditions or system reliability, and these result in more complicated RE projects. Suitable maintenance and insurance policies are vital to reduce risks for RE system operators. This paper formulates a profit model that integrates system reliability, predictive maintenance, and green insurance into electricity pricing and capacity problems. A non-linear optimization solution procedure is proposed to determine the optimal electricity price, capacity, investment plan, predictive maintenance budget, and insurance level while maximizing company profit. The theoretical results indicate that RE systems’ increased reliability decreases the insurance level. However, an increase in the insurance level decreases RE project investments. Therefore, companies can attract more investments for RE projects if RE system reliability increases while insurance costs decrease. Additionally, this work not only presents a numerical analysis with examples and a sensitivity analysis to illustrate the model, but also discusses the opportunities this work offers for managers and analysts in practice.

Suggested Citation

  • Yu-Chung Tsao & Thuy-Linh Vu, 2023. "Electricity pricing, capacity, and predictive maintenance considering reliability," Annals of Operations Research, Springer, vol. 322(2), pages 991-1011, March.
    • Handle: RePEc:spr:annopr:v:322:y:2023:i:2:d:10.1007_s10479-023-05164-1
    DOI: 10.1007/s10479-023-05164-1
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10479-023-05164-1
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10479-023-05164-1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Frédéric Babonneau & Alain Haurie, 2019. "Energy technology environment model with smart grid and robust nodal electricity prices," Annals of Operations Research, Springer, vol. 274(1), pages 101-117, March.
    2. Fernandes, Gláucia & Gomes, Leonardo & Vasconcelos, Gabriel & Brandão, Luiz, 2016. "Mitigating wind exposure with zero-cost collar insurance," Renewable Energy, Elsevier, vol. 99(C), pages 336-346.
    3. Tian, Zhigang & Jin, Tongdan & Wu, Bairong & Ding, Fangfang, 2011. "Condition based maintenance optimization for wind power generation systems under continuous monitoring," Renewable Energy, Elsevier, vol. 36(5), pages 1502-1509.
    4. Rubin, Ofir D. & Babcock, Bruce A., 2013. "The impact of expansion of wind power capacity and pricing methods on the efficiency of deregulated electricity markets," Energy, Elsevier, vol. 59(C), pages 676-688.
    5. Ding, Fangfang & Tian, Zhigang, 2012. "Opportunistic maintenance for wind farms considering multi-level imperfect maintenance thresholds," Renewable Energy, Elsevier, vol. 45(C), pages 175-182.
    6. Lin, Yi-Kuei & Huang, Cheng-Fu & Chang, Ping-Chen, 2013. "System reliability evaluation of a touch panel manufacturing system with defect rate and reworking," Reliability Engineering and System Safety, Elsevier, vol. 118(C), pages 51-60.
    7. Tsao, Yu-Chung & Vu, Thuy-Linh, 2019. "Power supply chain network design problem for smart grid considering differential pricing and buy-back policies," Energy Economics, Elsevier, vol. 81(C), pages 493-502.
    8. Lin, Yi-Kuei & Chang, Ping-Chen, 2012. "Evaluate the system reliability for a manufacturing network with reworking actions," Reliability Engineering and System Safety, Elsevier, vol. 106(C), pages 127-137.
    9. Zhang, Chen & Gao, Wei & Yang, Tao & Guo, Sheng, 2019. "Opportunistic maintenance strategy for wind turbines considering weather conditions and spare parts inventory management," Renewable Energy, Elsevier, vol. 133(C), pages 703-711.
    10. Iskin, Ibrahim & Daim, Tugrul & Kayakutlu, Gulgun & Altuntas, Mehmet, 2012. "Exploring renewable energy pricing with analytic network process — Comparing a developed and a developing economy," Energy Economics, Elsevier, vol. 34(4), pages 882-891.
    11. Billimoria, Farhad & Poudineh, Rahmatallah, 2019. "Market design for resource adequacy: A reliability insurance overlay on energy-only electricity markets," Utilities Policy, Elsevier, vol. 60(C), pages 1-1.
    12. Vikas Khare & Savita Nema & Prashant Baredar, 2019. "Reliability analysis of hybrid renewable energy system by fault tree analysis," Energy & Environment, , vol. 30(3), pages 542-555, May.
    13. Yang, Hongming & Qiu, Jing & Meng, Ke & Zhao, Jun Hua & Dong, Zhao Yang & Lai, Mingyong, 2016. "Insurance strategy for mitigating power system operational risk introduced by wind power forecasting uncertainty," Renewable Energy, Elsevier, vol. 89(C), pages 606-615.
    14. Shayesteh, E. & Yu, J. & Hilber, P., 2018. "Maintenance optimization of power systems with renewable energy sources integrated," Energy, Elsevier, vol. 149(C), pages 577-586.
    15. Olivencia Polo, Fernando A. & Ferrero Bermejo, Jesús & Gómez Fernández, Juan F. & Crespo Márquez, Adolfo, 2015. "Failure mode prediction and energy forecasting of PV plants to assist dynamic maintenance tasks by ANN based models," Renewable Energy, Elsevier, vol. 81(C), pages 227-238.
    16. Abdollahzadeh, Hadi & Atashgar, Karim & Abbasi, Morteza, 2016. "Multi-objective opportunistic maintenance optimization of a wind farm considering limited number of maintenance groups," Renewable Energy, Elsevier, vol. 88(C), pages 247-261.
    17. Chao, Hung-po, 2010. "Price-Responsive Demand Management for a Smart Grid World," The Electricity Journal, Elsevier, vol. 23(1), pages 7-20, January.
    18. Erguido, A. & Crespo Márquez, A. & Castellano, E. & Gómez Fernández, J.F., 2017. "A dynamic opportunistic maintenance model to maximize energy-based availability while reducing the life cycle cost of wind farms," Renewable Energy, Elsevier, vol. 114(PB), pages 843-856.
    19. Zhang, Chen & Gao, Wei & Guo, Sheng & Li, Youliang & Yang, Tao, 2017. "Opportunistic maintenance for wind turbines considering imperfect, reliability-based maintenance," Renewable Energy, Elsevier, vol. 103(C), pages 606-612.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. McMorland, J. & Collu, M. & McMillan, D. & Carroll, J. & Coraddu, A., 2023. "Opportunistic maintenance for offshore wind: A review and proposal of future framework," Renewable and Sustainable Energy Reviews, Elsevier, vol. 184(C).
    2. Yaqiong Lv & Pan Zheng & Jiabei Yuan & Xiaohua Cao, 2023. "A Predictive Maintenance Strategy for Multi-Component Systems Based on Components’ Remaining Useful Life Prediction," Mathematics, MDPI, vol. 11(18), pages 1-23, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Izquierdo, J. & Márquez, A. Crespo & Uribetxebarria, J. & Erguido, A., 2020. "On the importance of assessing the operational context impact on maintenance management for life cycle cost of wind energy projects," Renewable Energy, Elsevier, vol. 153(C), pages 1100-1110.
    2. Li, Mingxin & Jiang, Xiaoli & Carroll, James & Negenborn, Rudy R., 2022. "A multi-objective maintenance strategy optimization framework for offshore wind farms considering uncertainty," Applied Energy, Elsevier, vol. 321(C).
    3. Nguyen, Thi Anh Tuyet & Chou, Shuo-Yan, 2019. "Improved maintenance optimization of offshore wind systems considering effects of government subsidies, lost production and discounted cost model," Energy, Elsevier, vol. 187(C).
    4. Nguyen, Thi-Anh-Tuyet & Chou, Shuo-Yan & Yu, Tiffany Hui-Kuang, 2022. "Developing an exhaustive optimal maintenance schedule for offshore wind turbines based on risk-assessment, technical factors and cost-effective evaluation," Energy, Elsevier, vol. 249(C).
    5. Shuo-Yan Chou & Xuan Loc Pham & Thi Anh Tuyet Nguyen & Tiffany Hui-Kuang Yu, 2023. "Optimal maintenance planning with special emphasis on deterioration process and vessel routing for offshore wind systems," Energy & Environment, , vol. 34(4), pages 739-763, June.
    6. McMorland, J. & Collu, M. & McMillan, D. & Carroll, J. & Coraddu, A., 2023. "Opportunistic maintenance for offshore wind: A review and proposal of future framework," Renewable and Sustainable Energy Reviews, Elsevier, vol. 184(C).
    7. Zhou, P. & Yin, P.T., 2019. "An opportunistic condition-based maintenance strategy for offshore wind farm based on predictive analytics," Renewable and Sustainable Energy Reviews, Elsevier, vol. 109(C), pages 1-9.
    8. Zhang, Chen & Gao, Wei & Yang, Tao & Guo, Sheng, 2019. "Opportunistic maintenance strategy for wind turbines considering weather conditions and spare parts inventory management," Renewable Energy, Elsevier, vol. 133(C), pages 703-711.
    9. Bakir, I. & Yildirim, M. & Ursavas, E., 2021. "An integrated optimization framework for multi-component predictive analytics in wind farm operations & maintenance," Renewable and Sustainable Energy Reviews, Elsevier, vol. 138(C).
    10. Juan Izquierdo & Adolfo Crespo Márquez & Jone Uribetxebarria & Asier Erguido, 2019. "Framework for Managing Maintenance of Wind Farms Based on a Clustering Approach and Dynamic Opportunistic Maintenance," Energies, MDPI, vol. 12(11), pages 1-17, May.
    11. Vu, Hai Canh & Do, Phuc & Fouladirad, Mitra & Grall, Antoine, 2020. "Dynamic opportunistic maintenance planning for multi-component redundant systems with various types of opportunities," Reliability Engineering and System Safety, Elsevier, vol. 198(C).
    12. Ren, Zhengru & Verma, Amrit Shankar & Li, Ye & Teuwen, Julie J.E. & Jiang, Zhiyu, 2021. "Offshore wind turbine operations and maintenance: A state-of-the-art review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 144(C).
    13. Shafiee, Mahmood & Sørensen, John Dalsgaard, 2019. "Maintenance optimization and inspection planning of wind energy assets: Models, methods and strategies," Reliability Engineering and System Safety, Elsevier, vol. 192(C).
    14. Manco, Pasquale & Rinaldi, Marta & Caterino, Mario & Fera, Marcello & Macchiaroli, Roberto, 2022. "Maintenance management for geographically distributed assets: a criticality-based approach," Reliability Engineering and System Safety, Elsevier, vol. 218(PB).
    15. Li, Mingxin & Jiang, Xiaoli & Carroll, James & Negenborn, Rudy R., 2023. "A closed-loop maintenance strategy for offshore wind farms: Incorporating dynamic wind farm states and uncertainty-awareness in decision-making," Renewable and Sustainable Energy Reviews, Elsevier, vol. 184(C).
    16. Erguido, A. & Crespo Márquez, A. & Castellano, E. & Gómez Fernández, J.F., 2017. "A dynamic opportunistic maintenance model to maximize energy-based availability while reducing the life cycle cost of wind farms," Renewable Energy, Elsevier, vol. 114(PB), pages 843-856.
    17. Yuri Merizalde & Luis Hernández-Callejo & Oscar Duque-Perez & Víctor Alonso-Gómez, 2019. "Maintenance Models Applied to Wind Turbines. A Comprehensive Overview," Energies, MDPI, vol. 12(2), pages 1-41, January.
    18. Abdollahzadeh, Hadi & Atashgar, Karim & Abbasi, Morteza, 2016. "Multi-objective opportunistic maintenance optimization of a wind farm considering limited number of maintenance groups," Renewable Energy, Elsevier, vol. 88(C), pages 247-261.
    19. Miguel A. Rodríguez-López & Luis M. López-González & Luis M. López-Ochoa & Jesús Las-Heras-Casas, 2018. "Methodology for Detecting Malfunctions and Evaluating the Maintenance Effectiveness in Wind Turbine Generator Bearings Using Generic versus Specific Models from SCADA Data," Energies, MDPI, vol. 11(4), pages 1-22, March.
    20. Lubing Xie & Xiaoming Rui & Shuai Li & Xin Hu, 2019. "Maintenance Optimization of Offshore Wind Turbines Based on an Opportunistic Maintenance Strategy," Energies, MDPI, vol. 12(14), pages 1-26, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:annopr:v:322:y:2023:i:2:d:10.1007_s10479-023-05164-1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.