Probabilistic production cost model for a power system with storage

The conventional production cost model uses the power system load for an average day with no consideration of the uncertainty that is entailed in this load. A probabilistic production cost model is presented that considers the stochastic nature of the load which is used for a power system with energy storage operating on a daily or weekly cycle. The optimum energy storage device, in the sense of minimizing the expected cost of meeting demand, is found. The model minimizes the statistical data and permits a separation of the fuel cost from it, so that a change in fuel cost would not require a great deal of recomputation. Finally, the deterministic approach using an average load is compared with the stochastic one, and it is shown that the deterministic approach leads to significant error in the optimum storage capacity.