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Hedging the Risk of Wind Power Production Using Dispatchable Energy Source

Author

Listed:
  • D’Amico Guglielmo

    (Department of Economics, University “G. D’Annunzio” of Chieti-Pescara, 65127Pescara, Italy)

  • Di Basilio Bice

    (Department of Economics, University “G. D’Annunzio” of Chieti-Pescara, 65127Pescara, Italy)

  • Petroni Filippo

    (Department of Management, Marche Polytechnic University, 60121Ancona, Italy)

Abstract

In this paper we advance a nonlinear optimization problem for hedging wind power variability by using a dispatchable energy source (DES) like gas. The model considers several important aspects such as modeling of wind power production, electricity price, nonlinear penalization scheme for energy underproduction and interrelations among the considered variables. Results are given in terms of optimal co-generation policy with DES. The optimal policy is interpreted and analyzed in different penalization scenarios and related to a 48 MW hypothetical wind park. The model is suitable for integration of wind energy especially for isolated grids. Some probabilistic results for special moments of a Log-Normal distribution are obtained; they are necessary for the evolution of the optimal policy.

Suggested Citation

  • D’Amico Guglielmo & Di Basilio Bice & Petroni Filippo, 2021. "Hedging the Risk of Wind Power Production Using Dispatchable Energy Source," Stochastics and Quality Control, De Gruyter, vol. 36(1), pages 1-20, June.
    • Handle: RePEc:bpj:ecqcon:v:36:y:2021:i:1:p:1-20:n:3
    DOI: 10.1515/eqc-2020-0033
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