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ECEN415/715:Physical and Economical Operations of Sustainable Energy Systems Spring 2021 Homework Assignment #5

The document describes a homework problem involving the optimization of energy and reserve allocation across four generators to meet a variable electricity demand between 300-720 MW. It also provides the characteristics of the four generators including their marginal costs of energy and reserve production. The problem asks to [1] formulate the energy-reserve co-optimization problem and [2] provide the solution for a range of demand values. A second problem involves calculating the net present value of two technology options for a new 600 MW power plant given parameters like investment cost and heat rate. The technology with the higher NPV should be adopted, and a higher interest rate would result in a lower NPV.

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107 views3 pages

ECEN415/715:Physical and Economical Operations of Sustainable Energy Systems Spring 2021 Homework Assignment #5

The document describes a homework problem involving the optimization of energy and reserve allocation across four generators to meet a variable electricity demand between 300-720 MW. It also provides the characteristics of the four generators including their marginal costs of energy and reserve production. The problem asks to [1] formulate the energy-reserve co-optimization problem and [2] provide the solution for a range of demand values. A second problem involves calculating the net present value of two technology options for a new 600 MW power plant given parameters like investment cost and heat rate. The technology with the higher NPV should be adopted, and a higher interest rate would result in a lower NPV.

Uploaded by

Jak
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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ECEN415/715:Physical and Economical Operations of Sustainable

Energy Systems
Spring 2021 Homework Assignment #5
Problem 1 (60 points) (modified Example 5.7)
Let us consider a small electricity market where the demand varies between 300 and 720 MW. For
the sake of simplicity, we will assume that only one type of reserve is needed and that 250MW of this
reserve is required to maintain security for all loading conditions. Four generators are connected to
this system. The table below shows their relevant characteristics. We will assume that this market
operates on a centralized model, that the generators’ bids to produce electrical energy or provide
reserves are equal to their marginal costs.

Generating units Marginal cost of en- Marginal cost of re- Pmax Rmax
ergy ($/MWh) serve ($/MWh) (MW) (MW)
1 2 0 250 0
2 17 0 220 180
3 20 6 240 180
4 28 7 260 160

1. Give the formulation of this energy-reserve co-optimization problem, and remark the demand
variable as D (Please refer to the format in the Example 5.6 and 5.7 in the textbook).

2. Give the solution of the optimization problem for a range of values of the demand namely
300-720 MW (Please refer to the format in the Example 5.7).

Solutions:

1
1
min C = 2P1 + 17P2 + 20P3 + 28P4 + 0R1 + 0R2 + 6R3 + 7R4
P1 ,P2 ,P3 ,P4 ,R1 ,R2 ,R3 ,R4 ,

such that P1 + P2 + P3 + P4 = D
R1 + R2 + R3 + R4 ≥ 250
0 ≤ P1 ≤ 250
0 ≤ P2 ≤ 220
0 ≤ P3 ≤ 240
0 ≤ P4 ≤ 260
R1 = 0
0 ≤ R2 ≤ 180
0 ≤ R3 ≤ 180
0 ≤ R4 ≤ 160
0 ≤ P1 + R1 ≤ 250
0 ≤ P2 + R2 ≤ 220
0 ≤ P3 + R3 ≤ 240
0 ≤ P4 + R4 ≤ 260

Demand P1 R1 P2 R2 P3 R3 P4 R4
300-460 250 0 40 180 10-170 70 0 0
460-530 250 0 40 180 170-240 70-0 0 0-70
530-620 250 0 40-130 180-90 240 0 0 70-160
620-720 250 0 130 90 240 0 0-100 160

Problem 2 (40 pt)


Isabel Energy is exploring the possibility of building a new 600 MW power plant:

1. Given the parameters shown in the table below, which technology should it adopt for this
plant, assuming that the plant would have a utilization factor of 0.80 and would be able to
sell its output at an average price of 30 $/MWh? Assume the interest rate is 10%. (Even if
you don’t have the final answer, please make sure you write down the procedure.) (20 Pts)

2. If the interest rate is 15%, will Isabel Energy expect higher NPV (Net Present Value) or lower
NPV for the technology adopted? Give answer & explain your conclusion. (20 Pts)

Technology A Technology B
Investment cost 1000 $kW 700 $/kW
Expected plant life 30 years 30 years
Heat rate at rated output 8000 Btu/kWh 6000 Btu/kWh
Expected fuel cost 1.2 $/MBtu 3.0 $/MBtu

2
Solutions:

1
Company A:

• Cost = 1000 [$/kW] ×600 [MW] = 600,000 k$

• Production Cost = 0.8 × 600 [MW] ×8760 [h/yr] ×8000 [Btu/kWh] ×1.2 [$/MBtu] = 40366
k$

• Revenue = 0.8 × 600 [MW] ×8760 [h/yr] ×30 [$/MWh] =126144 k$

• Profit = Revenue - Production = 85778 k$

 
85.778 85.778 85.778
N P V = −600 + + + ... + = 203.71M$ (1)
1.1 1.12 1.130

Company B:

• Cost = 700 [$/kW] ×600 [MW] = 420,000 k$

• Production Cost = 0.8 × 600 [MW] ×8760 [h/yr] ×6000 [Btu/kWh] ×3 [$/MBtu] = 75686 k$

• Revenue = 0.8 × 600 [MW] ×8760 [h/yr] ×30 [$/MWh] =126144 k$

• Profit = Revenue - Production = 50458 k$

 
50.45 50.45 50.45
N P V = −420 + + + ... + = 52.76M$ (2)
1.1 1.12 1.130

Therefore, Technology A is adopted.

2
The NPV will be lower due to the higher interest rate.

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