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Uncertainty in the Electric Power Industry

Methods and Models for Decision Support

  • Christoph Weber

Part of the International Series in Operations Research & Management Science book series (ISOR, volume 77)

About this book

Introduction

Around the world, liberalization and privatization in the electricity industry have lead to increased competition among utilities. At the same time, utilities are now exposed more than ever to risk and uncertainties, which they cannot pass on to their customers through price increases as in a regulated environment. Especially electricity-generating companies have to face volatile wholesale prices, fuel price uncertainty, limited long-term hedging possibilities and huge, to a large extent, sunk investments.

In this context, Uncertainty in the Electric Power Industry: Methods and Models for Decision Support aims at an integrative view on the decision problems that power companies have to tackle. It systematically examines the uncertainties power companies are facing and develops models to describe them – including an innovative approach combining fundamental and finance models for price modeling. The optimization of generation and trading portfolios under uncertainty is discussed with particular focus on CHP and is linked to risk management. Here the concept of integral earnings at risk is developed to provide a theoretically sound combination of value at risk and profit at risk approaches, adapted to real market structures and market liquidity. Also methods for supporting long-term investment decisions are presented: technology assessment based on experience curves and operation simulation for fuel cells and a real options approach with endogenous electricity prices.

Keywords

Electric Power controlling electricity modeling modelling optimization simulation

Authors and affiliations

  • Christoph Weber
    • 1
  1. 1.Institut for Energy, Economics and Rational Use of EnergyUniversity of StuttgartGermany

Bibliographic information

  • DOI https://doi.org/10.1007/b100484
  • Copyright Information Springer Science+Business Media, Inc. 2005
  • Publisher Name Springer, New York, NY
  • eBook Packages Engineering
  • Print ISBN 978-0-387-23047-4
  • Online ISBN 978-0-387-23048-1
  • Series Print ISSN 0884-8289
  • Buy this book on publisher's site
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