Pumped-storage hydroelectric plants are very valuable assets on the electric grid and in electric markets as they are able to pump and store water for generation, thus allowing for grid-level storage. Within the realm of short-term energy markets, we present a model for determining forward-looking thresholds for making generation and pumping decisions at such plants. A multistage stochastic programming framework is developed to optimize the thresholds with uncertain system prices over the next three days. Tractability issues are discussed and a novel method based on an implementation of the scatter search algorithm is proposed. Given the size of the multistage stochastic programming formulation, Goran Vojvodic, Ahmad Jarrah, and David Morton argue that this novel method is a more accurate representation of the decision process. The authors demonstrate model stability and quality, and show that the forward thresholds obtained using a stochastic programming framework outperform the forward thresholds from a deterministic model, and thus can lead to efficiency gains for both the generation unit owner and the overall system in the real-time market.
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