Evaluating Approaches for Estimating the Water Value of a Hydropower Plant in the Day-Ahead Electricity Market

This paper addresses the question of whether the use of complex algorithms, based on mixed integer linear programming, to solve the intrastage decision problems of a stochastic dynamic programming (SDP) based annual scheduling model aimed to calculate the water value of a hydropower plant is a fruitful effort. To this purpose, four 1000-year long simulations using the water value obtained from four different optimisation SDP-based scheduling models (three using mixed integer linear programming to solve the intrastage decision problems and other using linear programming) are compared. The results suggest that the small increase in profit does not make up for the necessary increase in computational time. Nonetheless, the study should be replicated using other hydropower plants and more complicated topologies in order to get more sound conclusions.

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