A Linear Programming Model with Shortage Costs for Energy Planning and Allocation

Since the energy shortage is only a recent phenomenon, most of the quantitative models for energy planning have assumed that the demands can always be met by increasing imports. In this paper, the concept of an energy shortage cost is introduced, and a quantitative energy model with shortages is developed to study the interfuel competition, and optimal allocation policies during an energy shortage. The solution is approached through linear programming methods. In addition to the societal shortage cost for energy, other special features of our model include consideration of all forms of energy resources and new technologies of energy production. The model is illustrated through a number of case studies on an economic region using realistic energy data. Through these applications the model is shown to be a useful tool to assess the impact of future energy shortages, higher fuel prices, introduction of newer technologies, and various allocation policies.