Operational Plan for the Energy Plants Considering the Fluctuations in the Spot Price of Electricity

Abstract

Electricity is now traded in various ways in the market. Planning is necessary to buy or sell electricity in the market, because the fluctuations in the market price may incur significant costs. Regardless of the irregularities in power generation due to plant failures or inspections, or inconsistent weather conditions, the electricity demand of the market must be delivered. Therefore, it is necessary to have an operational plan that takes into account the uncertainty of the market price. Such uncertainty problems are usually solved by using the expected value minimization model. However, this model is risk-neutral, and does not consider fluctuations in the costs of different constituents. Accordingly, we propose a conditional value at risk minimization model that avoids the risk of fluctuating costs. In this study, we formulate a stochastic programming model for the operational plan (considering uncertainty), for factories. Further, we show the effectiveness of the proposed model by comparing it with the expected value minimization model.