IDEAS home Printed from https://ideas.repec.org/a/eee/renene/v75y2015icp224-242.html
   My bibliography  Save this article

A multiple objective decision making model for energy generation portfolio under fuzzy uncertainty: Case study of large scale investor-owned utilities in Florida

Author

Listed:
  • Zeng, Ziqiang
  • Nasri, Ehsan
  • Chini, Abdol
  • Ries, Robert
  • Xu, Jiuping

Abstract

The objective of this paper is to present a methodology to evaluate the viability of developing solar photovoltaic projects for large investor-owned utilities. By taking into account the trade-off between the cost per kWh of electricity generation and total risk for an investor-owned utility, a multi-objective model of the energy generation portfolios is developed. The decision making model can determine the proportion of different energy generation sources in an investor-owned utility portfolio that reduces risk while providing the lowest cost per kWh of electricity generation possible. In order to measure the risk of the investor-owned utility for energy portfolio selection, an investigation of possible dangers and failures of energy generation portfolios is made and 9 main failure modes are identified. The failure mode and effects analysis is employed to calculate the risk priority numbers for each risk. To deal with the uncertainties of the levelized cost of electricity and risk levels of failure modes, the fuzzy method is introduced and an equivalent crisp model is derived which is then solved by employing a multiple objective particle swarm optimization algorithm. The analysis for four large scale investor-owned utilities in Florida is presented to highlight the performance of the developed optimization method.

Suggested Citation

  • Zeng, Ziqiang & Nasri, Ehsan & Chini, Abdol & Ries, Robert & Xu, Jiuping, 2015. "A multiple objective decision making model for energy generation portfolio under fuzzy uncertainty: Case study of large scale investor-owned utilities in Florida," Renewable Energy, Elsevier, vol. 75(C), pages 224-242.
    • Handle: RePEc:eee:renene:v:75:y:2015:i:c:p:224-242
    DOI: 10.1016/j.renene.2014.09.030
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0960148114005953
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.renene.2014.09.030?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mudakkar, Syeda Rabab & Zaman, Khalid & Khan, Muhammad Mushtaq & Ahmad, Mehboob, 2013. "Energy for economic growth, industrialization, environment and natural resources: Living with just enough," Renewable and Sustainable Energy Reviews, Elsevier, vol. 25(C), pages 580-595.
    2. Alam Hossain Mondal, Md. & Sadrul Islam, A.K.M., 2011. "Potential and viability of grid-connected solar PV system in Bangladesh," Renewable Energy, Elsevier, vol. 36(6), pages 1869-1874.
    3. Bhattacharya, Anindya & Kojima, Satoshi, 2012. "Power sector investment risk and renewable energy: A Japanese case study using portfolio risk optimization method," Energy Policy, Elsevier, vol. 40(C), pages 69-80.
    4. Muñoz, José Ignacio & Sánchez de la Nieta, Agustín A. & Contreras, Javier & Bernal-Agustín, José L., 2009. "Optimal investment portfolio in renewable energy: The Spanish case," Energy Policy, Elsevier, vol. 37(12), pages 5273-5284, December.
    5. Zaman, Khalid & Mushtaq Khan, Muhammad & Ahmad, Mehboob, 2013. "Factors affecting commercial energy consumption in Pakistan: Progress in energy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 19(C), pages 107-135.
    6. Johnson, Sean D. & Moyer, Elisabeth J., 2012. "Feasibility of U.S. renewable portfolio standards under cost caps and case study for Illinois," Energy Policy, Elsevier, vol. 49(C), pages 499-514.
    7. Mumtaz, Rehma & Zaman, Khalid & Sajjad, Faiza & Lodhi, Muhammad Saeed & Irfan, Muhammad & Khan, Imran & Naseem, Imran, 2014. "Modeling the causal relationship between energy and growth factors: Journey towards sustainable development," Renewable Energy, Elsevier, vol. 63(C), pages 353-365.
    8. Khan, Muhammad Azhar & Khan, Muhammad Zahir & Zaman, Khalid & Arif, Mariam, 2014. "Global estimates of energy-growth nexus: Application of seemingly unrelated regressions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 29(C), pages 63-71.
    9. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
    10. Reichelstein, Stefan & Yorston, Michael, 2013. "The prospects for cost competitive solar PV power," Energy Policy, Elsevier, vol. 55(C), pages 117-127.
    11. Zahedi, A., 2006. "Solar photovoltaic (PV) energy; latest developments in the building integrated and hybrid PV systems," Renewable Energy, Elsevier, vol. 31(5), pages 711-718.
    12. Tichi, S.G. & Ardehali, M.M. & Nazari, M.E., 2010. "Examination of energy price policies in Iran for optimal configuration of CHP and CCHP systems based on particle swarm optimization algorithm," Energy Policy, Elsevier, vol. 38(10), pages 6240-6250, October.
    13. Purohit, Ishan & Purohit, Pallav, 2010. "Techno-economic evaluation of concentrating solar power generation in India," Energy Policy, Elsevier, vol. 38(6), pages 3015-3029, June.
    14. Zhai, Pei, 2013. "Analyzing solar energy policies using a three-tier model: A case study of photovoltaics adoption in Arizona, United States," Renewable Energy, Elsevier, vol. 57(C), pages 317-322.
    15. Li, Jun & Xu, Jiuping, 2009. "A novel portfolio selection model in a hybrid uncertain environment," Omega, Elsevier, vol. 37(2), pages 439-449, April.
    16. Wang, Jiang-Jiang & Jing, You-Yin & Zhang, Chun-Fa & Zhao, Jun-Hong, 2009. "Review on multi-criteria decision analysis aid in sustainable energy decision-making," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(9), pages 2263-2278, December.
    17. Anghinolfi, Davide & Paolucci, Massimo, 2009. "A new discrete particle swarm optimization approach for the single-machine total weighted tardiness scheduling problem with sequence-dependent setup times," European Journal of Operational Research, Elsevier, vol. 193(1), pages 73-85, February.
    18. Shimon Awerbuch, 2006. "Portfolio-Based Electricity Generation Planning: Policy Implications For Renewables And Energy Security," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 11(3), pages 693-710, May.
    19. Taeho Woo, 2012. "Dynamical Modeling of Economy in Global Nuclear Energy Market," Springer Series in Reliability Engineering, in: Atomic Information Technology, edition 127, chapter 0, pages 11-22, Springer.
    20. Yapicioglu, Haluk & Smith, Alice E. & Dozier, Gerry, 2007. "Solving the semi-desirable facility location problem using bi-objective particle swarm," European Journal of Operational Research, Elsevier, vol. 177(2), pages 733-749, March.
    21. Awerbuch, Shimon, 2000. "Investing in photovoltaics: risk, accounting and the value of new technology," Energy Policy, Elsevier, vol. 28(14), pages 1023-1035, November.
    22. Branker, K. & Pathak, M.J.M. & Pearce, J.M., 2011. "A review of solar photovoltaic levelized cost of electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(9), pages 4470-4482.
    23. Li, Xiang & Qin, Zhongfeng & Kar, Samarjit, 2010. "Mean-variance-skewness model for portfolio selection with fuzzy returns," European Journal of Operational Research, Elsevier, vol. 202(1), pages 239-247, April.
    24. Davoudpour, Hamid & Rezaee, Sara & Ashrafi, Maryam, 2012. "Developing a framework for renewable technology portfolio selection: A case study at a R&D center," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(6), pages 4291-4297.
    25. Suzuki, Kengo & Uchiyama, Yohji, 2010. "Quantifying the risk of an increase in the prices of non-energy products by combining the portfolio and input-output approaches," Energy Policy, Elsevier, vol. 38(10), pages 5867-5877, October.
    26. Bodie, Zvi & Detemple, Jerome B. & Otruba, Susanne & Walter, Stephan, 2004. "Optimal consumption-portfolio choices and retirement planning," Journal of Economic Dynamics and Control, Elsevier, vol. 28(6), pages 1115-1148, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yury Sekretarev & Tatyana Myateg & Aminjon Gulakhmadov & Murodbek Safaraliev & Sergey Mitrofanov & Natalya Zubova & Olga Atamanova & Xi Chen, 2022. "Models of Optimal Operating Modes of the Water-Economic Complex on the Basis of Hydro Resource Price Evaluation," Mathematics, MDPI, vol. 10(5), pages 1-30, February.
    2. Wu, Yunna & Xu, Chuanbo & Ke, Yiming & Chen, Kaifeng & Sun, Xiaokun, 2018. "An intuitionistic fuzzy multi-criteria framework for large-scale rooftop PV project portfolio selection: Case study in Zhejiang, China," Energy, Elsevier, vol. 143(C), pages 295-309.
    3. Cardoso de Lima, Gracieli Sartório & Lopes, Elaine Coelho & Motta, Juliana Gutierrez & Asano, Roberto & Valverde, María & Suyama, Ricardo & Leite, Patricia Teixeira, 2018. "Sustainable development enhanced in the decision process of electricity generation expansion planning," Renewable Energy, Elsevier, vol. 123(C), pages 563-577.
    4. Marcin Rabe & Dalia Streimikiene & Yuriy Bilan, 2019. "The Concept of Risk and Possibilities of Application of Mathematical Methods in Supporting Decision Making for Sustainable Energy Development," Sustainability, MDPI, vol. 11(4), pages 1-24, February.
    5. Ioannou, Anastasia & Angus, Andrew & Brennan, Feargal, 2017. "Risk-based methods for sustainable energy system planning: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 74(C), pages 602-615.
    6. Xiaoyang Zhou & Canhui Zhao & Jian Chai & Benjamin Lev & Kin Keung Lai, 2016. "Low-Carbon Based Multi-Objective Bi-Level Power Dispatching under Uncertainty," Sustainability, MDPI, vol. 8(6), pages 1-23, June.
    7. Yi, Liqi & Li, Tao & Zhang, Ting, 2021. "Optimal investment selection of regional integrated energy system under multiple strategic objectives portfolio," Energy, Elsevier, vol. 218(C).
    8. Wu, Yunna & Xu, Chuanbo & Ke, Yiming & Li, Xinying & Li, Lingwenying, 2019. "Portfolio selection of distributed energy generation projects considering uncertainty and project interaction under different enterprise strategic scenarios," Applied Energy, Elsevier, vol. 236(C), pages 444-464.
    9. Locatelli, Giorgio & Invernizzi, Diletta Colette & Mancini, Mauro, 2016. "Investment and risk appraisal in energy storage systems: A real options approach," Energy, Elsevier, vol. 104(C), pages 114-131.
    10. Suganthi, L. & Iniyan, S. & Samuel, Anand A., 2015. "Applications of fuzzy logic in renewable energy systems – A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 48(C), pages 585-607.
    11. Jicheng Liu & Qiongjie Dai, 2020. "Portfolio Optimization of Photovoltaic/Battery Energy Storage/Electric Vehicle Charging Stations with Sustainability Perspective Based on Cumulative Prospect Theory and MOPSO," Sustainability, MDPI, vol. 12(3), pages 1-20, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pérez Odeh, Rodrigo & Watts, David & Flores, Yarela, 2018. "Planning in a changing environment: Applications of portfolio optimisation to deal with risk in the electricity sector," Renewable and Sustainable Energy Reviews, Elsevier, vol. 82(P3), pages 3808-3823.
    2. Marrero, Gustavo A. & Ramos-Real, Francisco Javier, 2010. "Electricity generation cost in isolated system: The complementarities of natural gas and renewables in the Canary Islands," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(9), pages 2808-2818, December.
    3. Bergek, Anna & Mignon, Ingrid & Sundberg, Gunnel, 2013. "Who invests in renewable electricity production? Empirical evidence and suggestions for further research," Energy Policy, Elsevier, vol. 56(C), pages 568-581.
    4. Shakouri, Mahmoud & Lee, Hyun Woo & Kim, Yong-Woo, 2017. "A probabilistic portfolio-based model for financial valuation of community solar," Applied Energy, Elsevier, vol. 191(C), pages 709-726.
    5. Ioannou, Anastasia & Angus, Andrew & Brennan, Feargal, 2017. "Risk-based methods for sustainable energy system planning: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 74(C), pages 602-615.
    6. Shakouri, Mahmoud & Lee, Hyun Woo & Choi, Kunhee, 2015. "PACPIM: New decision-support model of optimized portfolio analysis for community-based photovoltaic investment," Applied Energy, Elsevier, vol. 156(C), pages 607-617.
    7. Jano-Ito, Marco A. & Crawford-Brown, Douglas, 2017. "Investment decisions considering economic, environmental and social factors: An actors' perspective for the electricity sector of Mexico," Energy, Elsevier, vol. 121(C), pages 92-106.
    8. Wüstenhagen, Rolf & Menichetti, Emanuela, 2012. "Strategic choices for renewable energy investment: Conceptual framework and opportunities for further research," Energy Policy, Elsevier, vol. 40(C), pages 1-10.
    9. deLlano-Paz, Fernando & Calvo-Silvosa, Anxo & Iglesias Antelo, Susana & Soares, Isabel, 2015. "The European low-carbon mix for 2030: The role of renewable energy sources in an environmentally and socially efficient approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 48(C), pages 49-61.
    10. Dornan, Matthew & Jotzo, Frank, 2015. "Renewable technologies and risk mitigation in small island developing states: Fiji’s electricity sector," Renewable and Sustainable Energy Reviews, Elsevier, vol. 48(C), pages 35-48.
    11. Matthew Dornan & Frank Jotzo, 2012. "Renewable Technologies and Risk Mitigation in Small Island Developing States (SIDS): Fiji’s Electricity Sector," Development Policy Centre Discussion Papers 1213, Development Policy Centre, Crawford School of Public Policy, The Australian National University.
    12. deLlano-Paz, Fernando & Martínez Fernandez, Paulino & Soares, Isabel, 2016. "Addressing 2030 EU policy framework for energy and climate: Cost, risk and energy security issues," Energy, Elsevier, vol. 115(P2), pages 1347-1360.
    13. Paulino Martinez-Fernandez & Fernando deLlano-Paz & Anxo Calvo-Silvosa & Isabel Soares, 2018. "Pollutant versus non-pollutant generation technologies: a CML-analogous analysis," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 20(1), pages 199-212, December.
    14. Marrero, Gustavo A. & Puch, Luis A. & Ramos-Real, Francisco J., 2015. "Mean-variance portfolio methods for energy policy risk management," International Review of Economics & Finance, Elsevier, vol. 40(C), pages 246-264.
    15. Śmiech, Sławomir & Papież, Monika, 2014. "Energy consumption and economic growth in the light of meeting the targets of energy policy in the EU: The bootstrap panel Granger causality approach," Energy Policy, Elsevier, vol. 71(C), pages 118-129.
    16. Zhang, Mingming & Tang, Yamei & Liu, Liyun & Zhou, Dequn, 2022. "Optimal investment portfolio strategies for power enterprises under multi-policy scenarios of renewable energy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 154(C).
    17. Losekann, Luciano & Marrero, Gustavo A. & Ramos-Real, Francisco J. & de Almeida, Edmar Luiz Fagundes, 2013. "Efficient power generating portfolio in Brazil: Conciliating cost, emissions and risk," Energy Policy, Elsevier, vol. 62(C), pages 301-314.
    18. Malhotra, Abhishek & Schmidt, Tobias S. & Haelg, Leonore & Waissbein, Oliver, 2017. "Scaling up finance for off-grid renewable energy: The role of aggregation and spatial diversification in derisking investments in mini-grids for rural electrification in India," Energy Policy, Elsevier, vol. 108(C), pages 657-672.
    19. Vithayasrichareon, Peerapat & MacGill, Iain F., 2013. "Assessing the value of wind generation in future carbon constrained electricity industries," Energy Policy, Elsevier, vol. 53(C), pages 400-412.
    20. de-Llano Paz, Fernando & Antelo, Susana Iglesias & Calvo Silvosa, Anxo & Soares, Isabel, 2014. "The technological and environmental efficiency of the EU-27 power mix: An evaluation based on MPT," Energy, Elsevier, vol. 69(C), pages 67-81.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:renene:v:75:y:2015:i:c:p:224-242. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/renewable-energy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.