In a deregulated electricity market, optimal hydropower operation should be achieved through informed decisions to facilitate the delivery of energy production in forward markets and energy purchase level from other power producers within real-time markets. This study develops a stochastic programming model that considers the influence of uncertain streamflow on hydropower energy production and the effect of variable spot energy prices on the cost of energy purchase (energy shortfall). The proposed model is able to handle uncertainties expressed by both a probability distribution and discretized scenarios. Conflicting decisions are resolved by maximizing the expected value of net revenue, which jointly considers benefit and cost terms under uncertainty. Methodologies are verified using a case study of the Three Gorges cascade hydropower system. The results demonstrate that optimal operation policies are derived based upon systematic evaluations on the benefit and cost terms that are affected by multiple uncertainties. Moreover, near-optimal operation policy under the case of inaccurate spot price forecasts is also analyzed. The results also show that a proper policy for guiding hydropower operation seeks the best compromise between energy production and energy purchase levels, which explores their nonlinear tradeoffs over different time periods.
A stochastic programming model for an energy planning problem: formulation, solution method and application
