Meeting Corporate Renewable Power Targets

Alessio Trivella, Danial Mohseni-Taheri, Selvaprabu Nadarajah

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    Abstract

    Large companies have recently started to incorporate renewable energy standards in their corporate sustainability goals. In particular, several companies have committed to procure a specific percentage of their electricity demand from renewable sources, i.e., reach a renewable power target by a future date. Dominant corporate procurement strategies include (i) buying power from the spot market and supplementing it with renewable energy certificates (RECs) and (ii) entering long-term bilateral contracts known as power purchase agreements (PPAs) to buy power directly from a renewable generator. Constructing a multi-period procurement portfolio containing these buying options is complex due to stochastic ower demand as well as volatile power and RECs prices. In this work, we study how to set up a power sourcing policy to reach a renewable target and sustain it at minimum expected cost. We provide analytical insights on stylized models containing a few periods. We also formulate a multi-period Markov decision process (MDP) that incorporates a PPA pricing model consistent with practice. This MDP has high-dimensional endogenous and exogenous components in its state and is thus
    intractable. We overcome this intractability by developing a heuristic policy based on a new dual reoptimization scheme that relies on information relaxations. We find that our dual reoptimization approach outperforms commonly used primal reoptimization methods and simple heuristics on realistic instances.
    Original languageEnglish
    Publication date2018
    Publication statusPublished - 2018
    EventEURO 2018 conference on Operational Research - Valencia, Spain
    Duration: 9 Jul 201811 Jul 2018

    Conference

    ConferenceEURO 2018 conference on Operational Research
    CountrySpain
    CityValencia
    Period09/07/201811/07/2018

    Cite this

    Trivella, A., Mohseni-Taheri, D., & Nadarajah, S. (2018). Meeting Corporate Renewable Power Targets. Abstract from EURO 2018 conference on Operational Research, Valencia, Spain.