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Holistic energy procurement planning for large industrial consumers through energy resources expansion and participation in multiple electricity markets and contracts

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  • Sadeghi, Ali
  • Rahimiyan, Morteza

Abstract

Energy procurement planning (EPP) for large industrial consumers (LICs) is a complex and critical task due to their high energy intensity and the strong interdependence between energy consumption and production processes. This complexity is further heightened by the diversity of procurement options, including both conventional and renewable energy resources, and participation in multiple electricity markets and contract types. This paper presents a holistic EPP model that integrates all essential aspects of energy procurement for LICs. The model enables optimal decisions on the size and technology of new energy resources and supports energy trading across various market mechanisms, such as capacity certificates, futures, and wholesale electricity markets, and contract types, including bilateral agreements, feed-in-tariff schemes, and power purchase agreements, spanning short-, medium-, and long-term horizons. The integration of load management with the industrial production process enables realistic and flexible demand-side participation in both incentive-based and price-based demand response programs. To address uncertainties, such as the availability of conventional and renewable energy sources, market and contract prices, fuel costs, industrial commodity prices, and electricity demand, a risk-constrained stochastic programming approach is employed. The effectiveness of the model is demonstrated through a case study of the Shahrood cement plant in Iran. Results show that under more risk-averse strategies, investment in generation capacity and energy sales via feed-in-tariff contracts decrease, while energy purchases through bilateral contracts remain stable due to their cost advantage. By shifting from a risk-neutral to a more risk-averse strategy, the total capacity investment and the amount of energy sold through feed-in-tariff contracts decrease by 30.25 % and 50.26 %, respectively. Furthermore, when budget and self-sufficiency constraints are removed, both decisions decrease by 100 %, effectively reducing the capacity investment and feed-in-tariff energy sales to zero under the risk-averse strategy.

Suggested Citation

  • Sadeghi, Ali & Rahimiyan, Morteza, 2025. "Holistic energy procurement planning for large industrial consumers through energy resources expansion and participation in multiple electricity markets and contracts," Applied Energy, Elsevier, vol. 401(PC).
    • Handle: RePEc:eee:appene:v:401:y:2025:i:pc:s0306261925015454
    DOI: 10.1016/j.apenergy.2025.126815
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    References listed on IDEAS

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