Coping with the renewable portfolio standard: A utility’s perspective Event as iCalendar

(Information Systems and Operations Management)

07 December 2018

1 - 2pm

Venue: The University of Auckland Business School, Level 3, Room 317, 12 Grafton Road, Auckland, 1010

Presenter: Dr Sha Liao, University of the Fraser Valley, Canada

We study a single utility’s optimal policy under the Renewable Portfolio Standard, which requires it to supply a certain percentage of its energy from renewable resources. The utility demonstrates its compliance by holding a sufficient amount of Renewable Energy Certificates (RECs) at the end of each year. We formulate the utility’s problem as a multi-period stochastic dynamic program. In each period, the utility purchases energy from wholesale energy market to satisfy a stochastic demand. Two energy options, renewable or regular, are available, with different prices. Meanwhile, the utility can buy or sell RECs in an outside REC market. The electricity prices and REC prices are stochastic. We find that the utility’s optimal trading policy in the REC market is a target interval policy. We show that under some conditions it is optimal for the utility to do single sourcing, and under other conditions it is optimal for the utility to do dual sourcing. We derive explicit formulas and perform sensitivity analysis for the optimal purchasing quantities in each condition.

Sha Liao is an assistant professor in School of Business at the University of the Fraser Valley, Canada. She obtained her Ph.D. in Management Science from the University of British Columbia in 2015. Her research interests include sustainability, operations management, optimization, game theory, supply chain management, and bounded rationality.

For more information contact:
Jaeseok Lee
Ext. 82170