Estimating the variance of production cost using a stochastic load model

The purpose of this paper is to provide a realistic load variation model to be used in short-term (one to three years) planning studies. A stochastic model is proposed, and this model is used to quantify the variation of the estimated production cost that is directly affected by the load uncertainty. The paper presents a method of estimating the variation of production cost. This is the first paper to use a Gauss-Markov stochastic model of load with a chronological production simulation model. This load model captures the stochastic load variation behavior and the correlation between weekly peak demand and weekly energy. A weekly Gauss-Markov sampling scheme is incorporated in the proposed approach to model load variation. This stochastic load model is used to generate sample chronological load profiles that represent the annual load variation in weekly detail. These load profiles are then used in annual Monte Carlo production simulation. Case studies illustrate the implementation of this stochastic load variation modeling. These case studies illustrate that load uncertainty has a significantly larger effect on cost uncertainty than does uncertainty in unit availability.