Stochastic Optimization of Power Generation and Storage Management in a Market Environment

This chapter provides an overview of practically applying mathematical optimization techniques to short-term and medium-term planning of a power generation system in a market environment. The considered power generating system may contain thermal plants (gas or coal fired), hydro power plants, new renewables, as well as dedicated energy storages (e.g., gas storages, hydro reservoirs). We argue that stochastic optimization is an appropriate modeling framework in order to take into account the uncertainty of input data (such as natural hydrologic inflows and energy market prices), market decision structures, as well as the optional character of power generating units and energy storages.