Optimization Topics Related to Small Power Producing Facilities Operating under Energy Spot Pricing Policies

Small Power Producing Facilities will become more and more common as the various provisions of the Public Utility Regulatory Policies Act (PURPA) are taken advantage of by utility and customers. These facilities incorporate several features which allow the user to increase his operational flexibilty with respect to the local utility. These facilities can be: local generation, local dependent generation, local energy storage facility, and shiftable load schedule. The only true control the utility has over the actual operation of such facilities is through the judicious selection of the energy prices proposed to such users both for the sale and purchase of energy. It is likely that most utilities will react to this novel user-utility relationship by implementing time-varying energy prices to better reflect their own production costs. These time varying energy prices are often referred to as Spot Prices and are rather commonly used in Europe. A key issue is then the simulation of the various SPPF loads under various spot pricing policies and as they would be seen from the utility's point of view. The purpose of the paper is to describe a general and flexible model for a large variety of SPPFs and to demonstrate its use on a number of operations planning and plant design problems.