Budget-cut: introduction to a budget based cutting-plane algorithm for capacity expansion models

Optimization Letters, vol. 16, pp. 1373–1391

Abstract

Abstract We present an algorithm to solve capacity extension problems that frequently occur in energy system optimization models. Such models describe a system where certain components can be installed to reduce future costs and achieve carbon reduction goals; however, the choice of these components requires the solution of a computationally expensive combinatorial problem. In our proposed algorithm, we solve a sequence of linear programs that serve to tighten a budget—the maximum amount we are willing to spend towards reducing overall costs. Our proposal finds application in the general setting where optional investment decisions provide an enhanced portfolio over the original setting that maintains feasibility. We present computational results on two model classes, and demonstrate computational savings up to 96% on certain instances.

Authors 6

1. Bismark Singh corresponding

   Friedrich-Alexander-Universität Erlangen-Nürnberg

   Affiliation as printed

   Department of Data Science, Friedrich-Alexander-Universität Erlangen-Nürnberg, Erlangen, 91058, Germany

   Department of Mathematics, Friedrich-Alexander-Universität Erlangen-Nürnberg, Erlangen, 91058, Germany

2. Oliver Rehberg

   Friedrich-Alexander-Universität Erlangen-Nürnberg

   Affiliation as printed

   Department of Mathematics, Friedrich-Alexander-Universität Erlangen-Nürnberg, Erlangen, 91058, Germany

3. Theresa Groß

   Forschungszentrum Jülich

   Affiliation as printed

   Forschungszentrum Jülich GmbH, Institute of Techno-economic Systems Analysis (IEK-3), Wilhelm-Johnen-Str., Jülich, 52428, Germany

4. Maximilian Hoffmann

   Forschungszentrum Jülich

   Affiliation as printed

   Forschungszentrum Jülich GmbH, Institute of Techno-economic Systems Analysis (IEK-3), Wilhelm-Johnen-Str., Jülich, 52428, Germany

5. Leander Kotzur

   Forschungszentrum Jülich

   Affiliation as printed

   Forschungszentrum Jülich GmbH, Institute of Techno-economic Systems Analysis (IEK-3), Wilhelm-Johnen-Str., Jülich, 52428, Germany

6. Detlef Stolten Aachen Chair for Fuel Cells c/o Institute of Techno-economic Systems Analysis (IEK-3)

   Forschungszentrum Jülich · RWTH Aachen University

   Affiliation as printed

   Chair for Fuel Cells, c/o Institute of Techno-economic Systems Analysis (IEK-3) , Forschungszentrum Jülich GmbH, RWTH Aachen University, Wilhelm-Johnen-Str., Jülich, 52428, Germany

   Forschungszentrum Jülich GmbH, Institute of Techno-economic Systems Analysis (IEK-3), Wilhelm-Johnen-Str., Jülich, 52428, Germany