Energy Cost Distortion Due to Ignoring Natural Gas Network Limitations in the Scheduling of Hydrothermal Power Systems

Abstract

The use of natural gas as fuel for electricity generation in thermal plants has played a key role in the development of power systems. The development of gas pipelines and other related infrastructure imposes availability constraints, which are often ignored when determining the optimal dispatch of the electric power system. This research proposes the use of an integrated optimization model, based on a stochastic dual dynamic programming methodology, to simulate both the scheduling of a hydrothermal power system and the transportation and availability of natural gas. We illustrate the applicability of the proposed model through the implementation of different case studies in the context of the main Chilean power network. We conclude that it is essential to consider the limitations that occur in natural gas power plant’s dispatch due to the fuel availability constraints, because they induce the use of power plants with higher variable costs, directly impacting the total operational costs and marginal costs.