Multicriteria energy policy investments and energy market clearance via integer programming

Abstract

The deregulation of energy markets has created a framework for policy making, still under evolution, which is much more complex than the previous one. As a consequence, new requirements need to be met, concerning both technical design and financial management. This framework renders the use of multicriteria techniques attractive. Here, the investments in suppliers, depending on the policy implemented, are formulated as an integer programming problem, which consists of different sub-problems according to the assumptions made and the market’s regulations. The equivalent relaxed problem is a mixed integer programming problem that can represent the clearance of the energy market by considering several criteria besides price and quantity. Nonlinearities are reformulated by inserting additional binary variables so that the solution algorithms are more effective and efficient in most realistic cases. The feasible solutions and the optimal solution that maximizes every time the market regulator’s gain are obtained, after imposing some thresholds on the criteria used to evaluate the different energy technologies, thus creating a decision support system for the regulator.