On multiple criteria decision support for suppliers on the competitive electric power market

On multiple criteria decision support for suppliers on the competitive electric power market

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Article ID: iaor20033180
Country: Netherlands
Volume: 121
Issue: 1
Start Page Number: 79
End Page Number: 104
Publication Date: Jul 2003
Journal: Annals of Operations Research
Authors: , , ,
Keywords: programming: multiple criteria, risk
Abstract:

As an active participant of a competitive energy market, the generator (the energy supplier) challenges new management decisions being exposed to the financial risk environment. There is a strong need for the decision support models and tools for energy market participants. This paper shows that the stochastic short-term planning model can be effectively used as a key analytical tool within the decision support process for relatively small energy suppliers (price-takers). A self-scheduling method for the thermal units on the energy market is addressed. A schedule acquired for given preferences can be used as a desired pattern for bidding process. The uncertainty of the market prices is modeled by a set of possible scenarios with assigned probabilities. Several risk criteria are introduced leading to a multiple criteria optimization problem. The risk criteria are well appealing and easily computable (by means of linear programming) but they meet the formal risk aversion standards. The aspiration/reservation based interactive analysis applied to the multiple criteria problem allows us to find an efficient solution (generation scheme) well adjusted to the generator preferences (risk attitude).

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