Abstract

All energy systems provide some level of security to its consumers. However, the right or optimum level of security is very diffi cult to assess. In order to make a comparison between the cost of providing energy security and level of security, the quantifi ed risks have to be in the common accounting platform of cost. Then, an optimum level of security and cost can be estimated using appropriate methods. Since no such attempts have been done to compare the risks and the cost in the same platform, i.e. monetary unit, it is unpractical to determine the optimum point between the risks and cost of providing security in any energy systems. The objective of this paper is to present a new hybrid simulation model in risk analysis which computes the total exposure of coal procurement in power generation through the summation of quantifi ed supply shortage risk in monetary terms and the cost of coal procurement. The hybrid simulation model is made up of two main components: 1) Dynamic Risk Calculation Program (DR-P) which was developed in System Dynamics platform for capturing the effect of dynamics behavior of price toward coal procurement risk, and 2) Non-delivery Probability Table Program (NdPT-P) which was developed in Matlab platform for computing all possible shortage level and the probability of shortage in selected coal procurement portfolio. The result from this paper has shown that the risks of coal procurement were increased as the cost of coal procurement were decreased and vice versa. However, the summation of risk and cost which give the total exposure of coal procurement has provided more accurate information for selecting the best coal procurement portfolio option.

Highlights

  • Energy has an important role for a virtuous cycle of human economic and social improvements

  • This paper aimed to introduce a new hybrid simulation model in risk assessment which compute the total exposure of coal procurement in power generation through the summation of quantified supply shortage risk in monetary terms and the cost of coal procurement

  • The hybrid simulation model is made up of two main components: 1) Non-delivery Probability Table component which was developed in MATLAB platform for calculating complex matrix structures of shortage level and the probability of shortage in selected coal procurement portfolio, and 2) Dynamic Risk Calculation component which was developed in System Dynamics platform for capturing the effect of dynamics behavior of price toward coal procurement risk and

Read more

Summary

Introduction

Energy has an important role for a virtuous cycle of human economic and social improvements. Providing affordable, adequate, and reliable modern energy supplies to the vast majority of the world’s population remains a major challenge and it has become the most critical energy issue for almost all developing countries. For these reasons, countries need to find ways to ensure a secure energy supply due to its important role as a production input and as a direct component in human wellbeing. A safer, more secured, sustainable and affordable energy supply is crucial for a nation’s economic and strategic interests. While many perfectly sound definitions of energy security are available, none is suitable to describe fully the effects of every element on energy security because it is a multifaceted notion (Jamasb & Pollitt, 2008) and has a different meaning to different people at different moments in time (Alhajji, 2007)

Objectives
Methods
Results

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call

Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.