Optimal Division of the Load Duration Curve for Managing Fuel Diversification

Fuel Diversification (FD) is important in managing the cost of electricity generation. Past studies have modeled the FD problem without explicit considerations of the load duration curve (LDC) thus yielding results that practitioners see as naïve and inappropriate. By classifying the loads into groupings (e.g. base, peaking, and cycling) with different average load factors, one can obtain a more meaningful model. The LDC, under this approach, is segmented using load factors by choosing contiguous segments of the load curve that are separately served by different mixes of technologies. This approach was demonstrated in Gotham et al. (2009), and the results were assessed to be much more credible than those obtained with the LDC ignored. However, their approach treated load cutoffs for the LDC as predetermined, exogenous levels. In this paper, load cutoffs are endogenously chosen in an optimal manner. This formulation is used to show that optimal cutoffs are sensitive to the level of risk aversion and to observe the rate at which solutions improve as the number of endogenous cutoffs increases. This analysis will provide overall insights into what constitutes a good set of cutoff levels and how many cutoffs are sufficient when considering how to break up the LDC for managing FD.

Joint work with Douglas J. Gotham, Paul V. Preckel, Kumar Muthuraman, Thomas L. Morin, Nelson A. Uhan.