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An inter-temporal optimization of flexible nuclear plants operation in market based electricity systems : The case of competition with reservoir

Author

Listed:
  • Maria Lykidi

    () (ADIS - Analyse des Dynamiques Industrielles et Sociales - UP11 - Université Paris-Sud - Paris 11 - Département d'Economie)

  • Jean-Michel Glachant

    () (ADIS - Analyse des Dynamiques Industrielles et Sociales - UP11 - Université Paris-Sud - Paris 11 - Département d'Economie, European University Institute - Department of Economics)

  • Pascal Gourdel

    () (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, PSE - Paris School of Economics)

Abstract

In electricity markets where competition has been established for a long time, a nuclear operator familiar with the operation of such markets could be interested in the optimal long-term management of a flexible nuclear set (like the French) in a competitive market. To obtain a long vision of the optimal management of a nuclear set, we realize a full inter-temporal optimization of the production which results from the maximization of the value of generation over the whole game. Our model takes into consideration the periodical shut-down of nuclear units to reload their fuel, which permits to analyze the nuclear fuel as a stock behaving like a reservoir. A flexible nuclear reservoir permits different allocations of the nuclear fuel during the different demand seasons of the year. Our analysis is realized within a general deterministic dynamic framework where perfect competition is assumed and two flexible types of generation exist : nuclear and thermal non-nuclear. The marginal cost of nuclear production is (significantly) lower that the one of non-thermal production, which induces a discontinuity of producers' profit. In view of this price discontinuity, a "regularization" of the merit order price is achieved within our numerical model which leads to an alternative optimization problem (reglarized problem) that constitutes a good approximation of our initial problem. We also prove that in the absence of binding productions constraints, solutions are fully characterized by a constant nuclear production. However, such solutions do not exist within our numerical model because of production constraints that are active at the optimum. Finally, we study the maximization of social welfare in an identical framework. Similarly, we demonstrate that in the absence of binding production constraints a constant non-nuclear thermal production is a characteristic property of solutions of the social welfare maximization problem.

Suggested Citation

  • Maria Lykidi & Jean-Michel Glachant & Pascal Gourdel, 2011. "An inter-temporal optimization of flexible nuclear plants operation in market based electricity systems : The case of competition with reservoir," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00654200, HAL.
  • Handle: RePEc:hal:cesptp:halshs-00654200
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00654200
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    Keywords

    Electricity market; nuclear generation; inter-temporal optimal reservoir operation; competition with reservoir; price discontinuity; social welfare.; Electricité; technologie nucléaire; réservoir de combustible nucléaire; gestion intertemporelle optimale des réservoirs; compétition parfaite avec réservoir; discontinuité des prix; bien-être social.;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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