| 1. |
- Siddiqui, Afzal S., 1975-, et al.
(författare)
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Ambiguities and nonmonotonicities under prosumer power : Optimal distributed energy resource investment in a deregulated electricity industry
- 2022
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Ingår i: TOP - An Official Journal of the Spanish Society of Statistics and Operations Research. - : Springer Science and Business Media LLC. - 1134-5764 .- 1863-8279. ; 30:3, s. 492-532
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Tidskriftsartikel (refereegranskat)abstract
- Prosumers adopt distributed energy resources (DER) to cover part of their own consumption and to sell surplus energy. Although individual prosumers are too dispersed to exert operational market power, they may collectively hold a strategic advantage over conventional generation in selecting DER capacity via aggregators. We devise a bilevel model to examine DER capacity sizing by a collective prosumer as a Stackelberg leader in an electricity industry where conventional generation may exert market power in operations. At the upper level, the prosumer chooses DER capacity in anticipation of lower-level operations by conventional generation and DER output. We demonstrate that exertion of market power in operations by conventional generation and the marginal cost of conventional generation affect DER investment by the prosumer in a nonmonotonic manner. Intuitively, in an industry where conventional generation exerts market power in operations similar to a monopoly (MO), the prosumer invests in more DER capacity than under perfectly competitive operations (PC) to take advantage of a high market-clearing price. However, if the marginal cost of conventional generation is high enough, then this intuitive result is reversed as the prosumer adopts more DER capacity under PC than under MO. This is because the high marginal cost of conventional generation prevents the market-clearing price from decreasing, thereby allowing for higher prosumer revenues. Moreover, competition relieves the chokehold on consumption under MO, which further incentivises the prosumer to expand DER capacity to capture market share. We prove the existence of a critical threshold for the marginal cost of conventional generation that leads to this counterintuitive result. Finally, we propose a countervailing regulatory mechanism that yields welfare-enhancing DER investment even in deregulated electricity industries.
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| 2. |
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| 3. |
- Boonman, Hettie J., et al.
(författare)
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Capacity optimization under uncertainty : The impact of operational time lags
- 2017
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Ingår i: European Journal of Operational Research. - : Elsevier BV. - 0377-2217 .- 1872-6860. ; 262:2, s. 660-672
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Tidskriftsartikel (refereegranskat)abstract
- Time lags in switching operational modes are typical in the manufacturing and power sectors but are not treated in most real options models. In this paper, we consider a firm that has the opportunity to suspend and to resume production infinitely many times subject to a time lag after each startup decision. We contribute to the literature by allowing the firm to determine its level of installed capacity in conjunction with its optimal investment timing. We find that an increase in the length of the time lag results in an increase in the optimal capacity level. Capacity optimization also interacts with the length of the time lag to affect investment timing and the triggers to suspend and resume production, thereby weakening the result about hysteresis from a standard real options model. Under the assumption of a fixed level of capacity, a longer lag speeds up the decision to resume operations due to a positive upside to the revenue but delays the suspension of operations. By contrast, with capacity optimization, a longer time lag results in a larger capacity choice, which can indirectly delay the investment decision and the timing to resume operations. This indirect effect dominates when the level of market uncertainty is low and the time lag is initially small.
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| 4. |
- Cardoso, G., et al.
(författare)
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Microgrid reliability modeling and battery scheduling using stochastic linear programming
- 2013
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Ingår i: Electric power systems research. - : Elsevier BV. - 0378-7796 .- 1873-2046. ; 103, s. 61-69
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Tidskriftsartikel (refereegranskat)abstract
- This paper describes the introduction of stochastic linear programming into Operations DER-CAM, a tool used to obtain optimal operating schedules for a given microgrid under local economic and environmental conditions. This application follows previous work on optimal scheduling of a lithium-iron-phosphate battery given the output uncertainty of a 1 MW molten carbonate fuel cell. Both are in the Santa Rita Jail microgrid, located in Dublin, California. This fuel cell has proven unreliable, partially justifying the consideration of storage options. Several stochastic DER-CAM runs are executed to compare different scenarios to values obtained by a deterministic approach. Results indicate that using a stochastic approach provides a conservative yet more lucrative battery schedule. Lower expected energy bills result, given fuel cell outages, in potential savings exceeding 6%.
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| 5. |
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| 6. |
- Chen, Yihsu, et al.
(författare)
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Market Power with Tradable Performance-Based CO2 Emission Standards in the Electricity Sector
- 2018
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Ingår i: Energy Journal. - : International Association for Energy Economics (IAEE). - 0195-6574 .- 1944-9089. ; 39:6, s. 121-145
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Tidskriftsartikel (refereegranskat)abstract
- The U.S. Clean Power Plan stipulates a state-specific performance-based CO2 emission standard, delegating states with considerable flexibility for using either a tradable performance-based or a mass-based permit program. This paper analyzes these two standards under imperfect competitive. We limit our attention to (1) short-run analyses and (2) a situation in which all states are subject to the same type of standard. We show that while the cross-subsidy inherent in the performance-based standard might effectively reduce power prices, it could also inflate energy consumption. A dominant firm with a relatively clean endowment under the performance-based standard would be able to manipulate the electricity market as well as to elevate permit prices, which might worsen market outcomes compared to its mass-based counterpart. On the other hand, the "cross-subsidy" could be the dominant force leading to a higher social welfare if the leader has a relatively dirty endowment.
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| 7. |
- Chen, Yihsu, et al.
(författare)
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Tradable Performance-Based CO₂ Emissions Standards : Walking on Thin Ice?
- 2016
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Ingår i: Energy: Expectations and Uncertainty. - : International Association for Energy Economics. ; , s. 1-28
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Konferensbidrag (övrigt vetenskapligt/konstnärligt)abstract
- Climate policy, like climate change itself, is subject to debate. Partially due to the political deadlock in Washington, DC, US climate policy, historically, has been driven mainly by state or regional effort until the recently introduced federal Clean Power Plan (CPP). Instead of a traditional mass-based standard, the US CPP stipulates a state-specific performance-based CO2 emission standard and delegates considerable flexibility to the states in achieving the standard. Typically, there are two sets of policy tools available: a tradable performance-based and a mass-based permit program. We analyze these two related but distinct standards when they are subject to imperfect competition in the product and/or permit markets. Stylized models are developed to produce general conclusions. Detailed models that account for heterogenous technologies and the transmission network are developed to evaluate policy efficiency. Depending on the scenarios under consideration, the resulting problem could be either a complementarity problem or a Stackelberg leaderfollower game, which is implemented as a mathematical program with equilibrium constraints (MPEC). We overcome the nonconvexity of MPECs by reformulating them as mixed integer problems. We show that while the cross-subsidy inherent in the performance-based standard that might effectively reduce power prices, it could inflate energy demand, thereby rendering permits scarce. When the leader in a Stackelberg formulation has a relatively clean endowment under the performancebased standard, its ability to manipulate the electricity market as well as to lower permit prices might worsen the market outcomes compared to its mass-based counterpart. On the other hand, when the leader has a relatively dirty endowment, the "cross-subsidy" could be the dominant force leading to a higher social welfare compared to the mass-based program. This paper contributes to the current policy debates in regulating emissions from the US power sector and highlights different incentives created by the mass- and performance-based standards.
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| 8. |
- Chronoopoulos, Michail, et al.
(författare)
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The value of capacity sizing under risk aversion and operational flexibility
- 2013
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Ingår i: IEEE transactions on engineering management. - 0018-9391 .- 1558-0040. ; 60:2, s. 272-288
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Tidskriftsartikel (refereegranskat)abstract
- Risk aversion typically erodes the value of an investment opportunity, often increasing the incentive to delay investment. Although this may be true when the decision maker has discretion only over the timing of investment, any additional discretion over the capacity of a project may lead to different results. In this paper, we extend the traditional real options approach by allowing for discretion over capacity while incorporating risk aversion and operational flexibility in the form of suspension and resumption options. In contrast to a project without scalable capacity, we find that increased risk aversion may actually facilitate investment because it decreases the optimal capacity of the project. Finally, we illustrate how the relative loss in the value of the investment opportunity due to an incorrect capacity choice may become less pronounced with increasing risk aversion and uncertainty.
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| 9. |
- Chronopoulos, Michail, et al.
(författare)
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Duopolistic competition under risk aversion and uncertainty
- 2014
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Ingår i: European Journal of Operational Research. - : Elsevier BV. - 0377-2217 .- 1872-6860. ; 236:2, s. 643-656
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Tidskriftsartikel (refereegranskat)abstract
- A monopolist typically defers entry into an industry as both price uncertainty and the level of risk aversion increase. By contrast, the presence of a rival typically hastens entry under risk neutrality. Here, we examine these two opposing effects in a duopoly setting. We demonstrate that the value of a firm and its entry decision behave differently with risk aversion and uncertainty depending on the type of competition. Interestingly, if the leader's role is defined endogenously, then higher uncertainty makes her relatively better off, whereas with the roles exogenously defined, the impact of uncertainty is ambiguous.
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| 10. |
- Chronopoulos, Michail, et al.
(författare)
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Optimal investment under operational flexibility, risk aversion, and uncertainty
- 2011
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Ingår i: European Journal of Operational Research. - : Elsevier BV. - 0377-2217 .- 1872-6860. ; 213:1, s. 221-237
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Tidskriftsartikel (refereegranskat)abstract
- Traditional real options analysis addresses the problem of investment under uncertainty assuming a risk-neutral decision maker and complete markets. In reality, however, decision makers are often risk averse and markets are incomplete. We confirm that risk aversion lowers the probability of investment and demonstrate how this effect can be mitigated by incorporating operational flexibility in the form of embedded suspension and resumption options. Although such options facilitate investment, we find that the likelihood of investing is still lower compared to the risk-neutral case. Risk aversion also increases the likelihood that the project will be abandoned, although this effect is less pronounced. Finally, we illustrate the impact of risk aversion on the optimal suspension and resumption thresholds and the interaction among risk aversion, volatility, and optimal decision thresholds under complete operational flexibility.
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