Electricity procurement of large consumers considering power-purchase agreements

Abstract

In an environment with high energy costs worldwide, the adequate determination of electricity procurement strategies by large electricity consumers is vital. This study intends to determine the best procurement strategy for electricity consumers by considering their participation in the pool and the possibility of signing different types of power purchase agreements, which can be physical/financial, on-site/off-site, with conventional/renewable energy suppliers. Additionally, the construction of a photovoltaic self-production unit is considered. This medium-term decision-making problem is formulated using a stochastic programming approach. A realistic case study is solved by considering an existing cement producer, actual pool price and renewable production data pertaining to the Spanish power system. The numerical results indicate that a risk-averse strategy obtained by the proposed model can maintain an increase in the procurement cost below 9% in a situation in which pool prices are 3.3 times higher.