Please use this identifier to cite or link to this item: https://doi.org/10.1016/j.apenergy.2013.02.020
Title: An optimization model for natural gas supply portfolios of a power generation company
Authors: Jirutitijaroen, P. 
Kim, S. 
Kittithreerapronchai, O.
Prina, J.
Keywords: Energy portfolio
Natural gas supply portfolio
Stochastic programming
Value of the stochastic solution
Issue Date: Jul-2013
Source: Jirutitijaroen, P., Kim, S., Kittithreerapronchai, O., Prina, J. (2013-07). An optimization model for natural gas supply portfolios of a power generation company. Applied Energy 107 : 1-9. ScholarBank@NUS Repository. https://doi.org/10.1016/j.apenergy.2013.02.020
Abstract: This paper considers a deregulated electricity market environment where a natural gas-fired generation company can engage in different types of contracts to manage its natural gas supply as well as trade on the electricity market. If the contracts are properly designed, they can protect the company from fluctuations in electricity price and demand, at some cost to the company's expected profit. This reduction in profit can be mitigated by trading on the natural gas and electricity spot markets, but this trading activity may also sometimes result in losses. A stochastic programming model is formulated to capture the hedging decisions made by the company, as well as the interactions between the natural gas and electricity markets. The benefits offered by this approach for profit maximization in a variety of business scenarios, such as the case where the company can hold some amount of gas in storage are studied and presented. It is found that the stochastic model enables the company to optimize the electricity generation schedule and the natural gas consumption, including spot price transactions and gas storage management. Several managerial insights into the natural gas market, natural gas storage, and distribution profit are given. © 2013 Elsevier Ltd.
Source Title: Applied Energy
URI: http://scholarbank.nus.edu.sg/handle/10635/55049
ISSN: 03062619
DOI: 10.1016/j.apenergy.2013.02.020
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