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An Electricity Procurement Model with Energy and Peak Charges

In: Stochastic Programming Applications in Finance, Energy, Planning and Logistics

Author

Listed:
  • 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)

Abstract

We 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.

Suggested Citation

  • A. B. Philpott & G. Pritchard, 2013. "An Electricity Procurement Model with Energy and Peak Charges," World Scientific Book Chapters, in: Horand I Gassmann & William T Ziemba (ed.), Stochastic Programming Applications in Finance, Energy, Planning and Logistics, chapter 14, pages 399-419, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814407519_0014
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