?url_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Adc&rft.title=Operation+of+distributed+generation+under+stochastic+prices&rft.creator=Siddiqui%2C+A.S.&rft.creator=Marnay%2C+C.&rft.description=The+ongoing+deregulation+of+electricity+industries+worldwide+is+providing+incentives+for+microgrids%2C%0D%0Aentities+that+use+small-scale+distributed+generation+(DG)+and+combined+heat+and+power+(CHP)+ap-%0D%0Aplications+to+meet+local+energy+loads%2C+to+evolve+independently+of+the+traditional+centralised+grid+in%0D%0Aorder+to+provide+greater+flexibility+and+energy+efficiency+to+end-use+consumers.+We+examine+the%0D%0Aimpact+of+start-up+costs+on+the+option+values+and+operating+schedules+of+on-site+DG+installed+by%0D%0Aa+microgrid+in+the+presence+of+stochastic+electricity+and+fuel+prices.+We+proceed+by+formulating+a%0D%0Astochastic+dynamic+programme+(SDP)+for+the+microgrid+that+minimises+its+expected+discounted+cost%0D%0Aover+a+time+horizon+and+solving+it+using+least-squares+Monte+Carlo+(LSMC)+simulation.+The+expected%0D%0Acost+saving+that+the+microgrid+realises+by+having+gas-fired+DG+installed+relative+to+meeting+its+entire%0D%0Aelectric+load+via+off-site+purchases+is+the+implied+option+value+of+DG.+Numerical+examples+indicate%0D%0Athat+although+start-up+costs+do+not+significantly+lower+DG+value%2C+they%2C+nevertheless%2C+have+a+profound%0D%0Aimpact+on+the+optimal+DG+operating+schedule+as+the+microgrid+must+incorporate+not+only+current%2C%0D%0Abut+also+future%2C+expected+start-up+costs+into+its+current+decision-making+process+as+an+opportunity%0D%0Acost.+As+a+consequence%2C+the+microgrid+becomes+more+hesitant+to+turn+DG+units+on+(off)%2C+preferring%0D%0Ato+wait+until+the+electricity+price+(natural+gas+generating+cost)+exceeds+the+natural+gas+generating%0D%0Acost+(electricity+price)+by+a+significant+margin+before+taking+action.+We+demonstrate+that+ignoring%0D%0Athis+tradeoff+and+proceeding+myopically+as+in+the+case+without+start-up+costs+results+in+drastically%0D%0Ahigher+expected+costs+and+fewer+opportunities+to+use+DG.&rft.subject=Distributed+generation%2C+stochastic+dynamic+programming%2C+real+options&rft.publisher=Lawrence+Berkeley+National+Laboratory&rft.date=2006-04&rft.type=Proceedings+paper&rft.language=eng&rft.source=+++++In%3A++Proceedings+of+the+29th+International+Conference+of+the+International+Association+for+Energy+Economics.++++Lawrence+Berkeley+National+Laboratory%3A+Berkeley%2C+USA.+(2006)+++++&rft.format=application%2Fpdf&rft.identifier=https%3A%2F%2Fdiscovery.ucl.ac.uk%2Fid%2Feprint%2F5332%2F1%2F5332.pdf&rft.identifier=https%3A%2F%2Fdiscovery.ucl.ac.uk%2Fid%2Feprint%2F5332%2F&rft.rights=open