Deciding on Micro-CHP; A Multi-Level Decision-Making Approach

Micro combined heat and power (micro-CHP) is a promising, more fuel efficient, technology that could change the energy infrastructure as a whole. This paper describes the possible decision-making that results from micro-CHP introduction. The focus lies on the supplier-household interaction. Decisions made by supplier (price of electricity to/from households) influence decisions of households (1. micro-CHP power level and 2. amount of discharged heat) and determine the supplier's operational costs. When the supplier takes into account the cost optimization of households (that is based on the supplier's decision) in making his price-setting decisions, the problem can be described as a multi-level decision-making (MLDM) problem. We describe how the problem can be modelled and present a solution strategy which considers a combination of two objective functions that are subject to a set of constraints. Results of supplier price-setting are presented as well. Solving the problem via the MLDM approach is expected to lead to improved decision-making and a better performance of the supplier. Applying MLDM to the decision problem presented here is novel and can contribute to dealing with decision-making complexity in the energy infrastructure in general