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Practice Summaries: An Optimization Mathematical Model for Concentrated Solar Power Financing Decisions at Lockheed Martin

Author

Listed:
  • Alan Taber

    (Lockheed Martin, Moorestown, New Jersey 08057)

  • Andrei Nikiforov

    (Rutgers School of Business, Camden, New Jersey 08102)

  • Alok Baveja

    (Rutgers School of Business, Camden, New Jersey 08102)

Abstract

Concentrated solar power plants are an alternative to natural gas turbine plants in the portfolios of utilities and independent power producers (IPPs). To obtain financing for a new plant, an IPP must rigorously establish plant production guarantees. We developed an optimization model that maximizes annual profits by generating an optimal hour-by-hour production schedule. We use a fast greedy heuristic to solve this mathematical model. This work has enabled Lockheed Martin and its developer partners to be successful in project negotiations with major utility companies, resulting in 725 megawatts of power plants in development and over $5 billion in predicted sales.

Suggested Citation

  • Alan Taber & Andrei Nikiforov & Alok Baveja, 2012. "Practice Summaries: An Optimization Mathematical Model for Concentrated Solar Power Financing Decisions at Lockheed Martin," Interfaces, INFORMS, vol. 42(6), pages 591-594, December.
    • Handle: RePEc:inm:orinte:v:42:y:2012:i:6:p:591-594
    DOI: 10.1287/inte.1120.0662
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