Impact of Modeling Approaches on Dispatch Optimization of Combined Cycle Gas Turbines

Due to the age structure of the German generation system and the nuclear phase out, a significant amount of older power plants will be substituted during the coming years by newly built generation units. Such projects are frequently realized as combined gas and steam turbines, so-called Combined Cycle Power Plants or Combined Cycle Gas Turbines (CCGT). These power plants, mostly fired by natural gas, possess high efficiency factors combined with low specific CO₂-emissions compared to other conventional power plants, e.g. fired by coal and moreover provide a high operational flexibility. As they represent a combination of several thermal processes, their generation planning and optimized dispatch are more demanding than those of existing steam or gas turbines. Therefore, a new formulation of the unit commitment problem is required, including all relevant technical and economic restrictions for scheduling CCGT. In this paper, the relevant characteristics of the different types of CCGT are analyzed. This especially includes part load efficiency and the permitted modes of operation. For modeling of these characteristics and for optimizing the CCGT dispatch, a decomposition approach as well as a linearized closed-loop formulation is introduced. In the decomposition the optimization problem is split into sub problems, which can be solved with specialized algorithms. As the recombination of these sub problems may result in a limitation of the overall solution quality, the closed-loop approach considers the entire problem, but has to linearize the formulation to ensure solvability. By applying both methods on an exemplary case the advantages and shortcomings of both approaches can be analyzed in detail. This comprises model accuracy, overall solution quality and a detailed schedule analysis and comparison. The paper??s results will also show the deviations caused by the different modeling approaches. Finally, the results show the added value of the adequate modeling of combined cycle power plants towards gas or steam turbines.     

Some Virtues of Speculation

Why are stock markets and foreign exchange markets so volatile? Professor Wolfgang Kasper, of the University of New South Wales, explains the difference between flow and asset markets and argues that changes in expectations cause the volatility of the latter.     

Incorporating Price-Induced Innovation in a Symmetric Generalised McFadden Cost Function with Several Outputs

This paper proposes a multiple-output Symmetric Generalised McFadden (SGM) cost function, incorporating both exogenous and endogenous technological change. Whilst exogenous technological change is captured by the usual time trend, endogenous or price-induced technological change is cast within a partial-adjustment framework involving lagged input prices. The study points to various dimensions or components of technological change, and allows to disentangle pure factor substitution, given the state of the technology, from factor substitution due to price-induced changes in technology. Under the conditions of non-jointness in input quantities, the model further allows to identify technological change biases for each output separately. An empirical application is presented in which the proposed model is applied to time-series data on the feed manufacturing industry in Belgium. To improve on the econometrics, the SGM cost function also incorporates linear splines.     

Dynamic competition with consumer inertia

We study a framework where two duopolists compete repeatedly in prices and where chosen prices potentially affect future market shares, but certainly do not affect current sales. This assumption of consumer inertia causes (noncooperative) coordination on high prices only to be possible as an equilibrium for low values of the discount factor. High discount factors increase opportunism and aggressiveness of competition to such an extent that high prices are no longer sustainable as an equilibrium outcome. Moreover, we find that both monopolization and enduring market share and price fluctuations (price wars) can be equilibrium path phenomena without requiring exogenous shocks in market or firm characteristics.     

Structure in creativity: An exploratory study to analyse the effects of structuring tools on scenario workshop results

Scenario projects increasingly combine quantitative models with qualitative, participatory products in order to make scenarios more coherent, relevant, credible and creative. A major advantage of adding participatory, qualitative scenarios is their ability to produce creative, innovative, non-linear products. Integrating participatory results with quantitative models, however, can lower their credibility of both products when they are not consistent. The low level of structure in most participatory output limits possibilities for linking them to quantitative models. More structure could be introduced, but this might hamper the creativity of the workshop results: outcomes (process) and outputs (storylines). This paper tests a new method to analyse the creativity of scenario storylines in order to analyse the effects of structuring tools on the creativity of workshop results. Both the perceptions of participants and the resulting storylines of nine case studies across Europe are used in the analysis. Results show that the use of structuring tools can have a negative effect on the creativity of the workshop, but the influence seems to vary between the different tools. The study shows the benefit of using indicators for the scenario quality criteria. More research is needed to develop indicators for other scenario quality criteria, to improve those developed here and to study the impact of structuring tools with a larger data set.     

A note on the existence of the power investor’s optimizer

Karatzas et al. (SIAM J. Control Optim. 29:707–730, 1991) ensure the existence of the expected utility maximizer for investors with constant relative risk aversion coefficients less than one. In this note, we explain a simple trick that allows us to use this result to provide the existence of utility maximizers for arbitrary coefficients of relative risk aversion. The simplicity of our approach is to be contrasted with the general existence result provided in Kramkov and Schachermayer (Ann. Appl. Probab. 9:904–950, 1999).     

Coordination versus flexibility in wage formation: a focus on the nominal wage impact of productivity in Germany,Greece, Ireland,Portugal, Spain and the United States

Wage coordination between countries of the European Monetary Union (EMU) aims at aligning nominal wage growth with labour productivity growth at the national level. We analyse the developments in Germany, the EMU’s periphery countries Greece, Ireland, Portugal and Spain along with the United States over the period 1980 to 2010. Apart from the contribution of productivity to nominal wages, we take into account the contributions of prices, unemployment, replacement rates and taxes by means of an econometrically estimated nonlinear equation resulting from a wage bargaining model. We further study the downward rigidities of nominal wages. The findings show that in past times of low productivity, price inflation and reductions in unemployment still put significant upward pressure on nominal wage growth. The periphery countries are far from aligning nominal wage growth with productivity growth. German productivity is a major wage determinant, but surely not the only one. Within the context of a free bargaining process between employers and labour unions, policy-makers can effectively use the replacement rate to steer the nominal wages outcome.