Diversification of fuel costs accounting for load variation

Ruangpattana, Suriya, Preckel, Paul V, Gotham, Douglas J, Muthuraman, Kumar, Velástegui, Marco, Morin, Thomas L and Uhan, Nelson A (2012) Diversification of fuel costs accounting for load variation. Energy Policy, 42. 400 - 408. ISSN 0301-4215

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Abstract

A practical mathematical programming model for the strategic fuel diversification problem is presented. The model is designed to consider the tradeoffs between the expected costs of investments in capacity, operating and maintenance costs, average fuel costs, and the variability of fuel costs. In addition, the model is designed to take the load curve into account at a high degree of resolution, while keeping the computational burden at a practical level.

The model is illustrated with a case study for Indiana's power generation system. The model reveals that an effective means of reducing the volatility of the system-level fuel costs is through the reduction of dependence on coal-fired generation with an attendant shift towards nuclear generation. Model results indicate that about a 25% reduction in the standard deviation of the generation costs can be achieved with about a 20–25% increase in average fuel costs. Scenarios that incorporate costs for carbon dioxide emissions or a moratorium on nuclear capacity additions are also presented.

Item Type: Article
Keywords: Energy risk management; Fuel price risk; Fuel diversification
Schools and Departments: School of Business, Management and Economics > SPRU - Science Policy Research Unit
Subjects: H Social Sciences > HG Finance > HG4501 Investment, capital formation, speculation > HG4900 By region or country
Q Science > QA Mathematics > QA0299 Analysis. Including analytical methods connected with physical problems
T Technology > T Technology (General) > T0055.4 Industrial engineering. Management engineering > T0057 Applied mathematics. Quantitative methods > T0057.6 Operations research. Systems analysis
T Technology > TA Engineering (General). Civil engineering (General) > TA0168 Systems engineering
T Technology > TK Electrical engineering. Electronics Nuclear engineering > TK1001 Production of electric energy or power. Powerplants. Central stations
Depositing User: Suriya Ruangpattana
Date Deposited: 03 Jul 2012 12:53
Last Modified: 03 Jul 2012 12:53
URI: http://sro.sussex.ac.uk/id/eprint/39799
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