Abstract
In a deregulated electricity market, optimal hydropower operation should be achieved through informed decisions to facilitate the delivery of energy production in forward markets and energy purchase level from other power producers within real-time markets. This study develops a stochastic programming model that considers the influence of uncertain streamflow on hydropower energy production and the effect of variable spot energy prices on the cost of energy purchase (energy shortfall). The proposed model is able to handle uncertainties expressed by both a probability distribution and discretized scenarios. Conflicting decisions are resolved by maximizing the expected value of net revenue, which jointly considers benefit and cost terms under uncertainty. Methodologies are verified using a case study of the Three Gorges cascade hydropower system. The results demonstrate that optimal operation policies are derived based upon systematic evaluations on the benefit and cost terms that are affected by multiple uncertainties. Moreover, near-optimal operation policy under the case of inaccurate spot price forecasts is also analyzed. The results also show that a proper policy for guiding hydropower operation seeks the best compromise between energy production and energy purchase levels, which explores their nonlinear tradeoffs over different time periods.
Highlights
The hydropower and clean energy industry in China boomed through the development of clean energy in the past two decades [1,2]
The expected system revenue and the expected energy purchase level decrease as λ increases, which shows that the increase in expected total revenue adversely affects the minimization of expected energy shortfall percentage and vice versa
This finding is attributed to the fact that the contracted energy is satisfied by the energy production from this hydropower producer and energy purchase from other producers
Summary
The hydropower and clean energy industry in China boomed through the development of clean energy in the past two decades [1,2]. With the abundance of clean energy, energy spill increases gradually when the excess energy from the supply side cannot be entirely consumed by energy demand from the demand side. This is primarily influenced by a low efficiency of energy management technology, especially under a regulated market that limits the flexibility of energy trade over multiple. Electricity firms under a deregulated electricity market can sign long-term trade contracts in the forward market and transact energy in the day-ahead or real-time market to deal with an energy surplus or energy shortfall produced by the imperfect estimation of energy production. The uncertainty induced by forecasting error could lead to the risk of deviation from operational targets of policy and payoff due to the limitation of long-term inflow forecasts precision, increasing the difficulty of decision-making
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