Pollution Regulation for Electricity Generators in a Transmission Network

DOI10.1137/21M1464026zbMATH Open1514.91101arXiv2111.13505OpenAlexW3215205652MaRDI QIDQ6042791FDOQ6042791

Authors: Nicolás Hernández Santibáñez, Alejandro Jofre, Dylan Possamaï 

Publication date: 4 May 2023

Published in: SIAM Journal on Control and Optimization (Search for Journal in Brave)

Abstract: In this paper we study a pollution regulation problem in an electricity market with a network structure. The market is ruled by an independent system operator (ISO for short) who has the goal of reducing the pollutant emissions of the providers in the network, by encouraging the use of cleaner technologies. The problem of the ISO formulates as a contracting problem with each one of the providers, who interact among themselves by playing a stochastic differential game. The actions of the providers are not observable by the ISO which faces moral hazard. By using the dynamic programming approach, we represent the value function of the ISO as the unique viscosity solution to the corresponding Hamilton-Jacobi-Bellman equation. We prove that this solution is smooth and characterise the optimal controls for the ISO. Numerical solutions to the problem are presented and discussed. We consider also a simpler problem for the ISO, with constant production levels, that can be solved explicitly in a particular setting.

Full work available at URL: https://arxiv.org/abs/2111.13505

Recommendations

• Optimal offering in electric power networks
• On a strategic model of pollution control
• Optimal dynamic regulation of carbon emissions market
• Electricity spot market with transmission losses
• Electric power network oligopoly as a dynamic Stackelberg game

zbMATH Keywords

moral hazardcontract theoryelectricity networkstransmission lossespollution regulation

Mathematics Subject Classification ID

Environmental economics (natural resource models, harvesting, pollution, etc.) (91B76) Dynamic programming in optimal control and differential games (49L20) Stochastic games, stochastic differential games (91A15) Contract theory (moral hazard, adverse selection) (91B41)

Cites Work

• Title not available (Why is that?)
• Continuous-time stochastic control and optimization with financial applications
• Backward Stochastic Differential Equations in Finance
• A fast algorithm for the two dimensional HJB equation of stochastic control
• Infinite dimensional analysis. A hitchhiker's guide.
• Envelope Theorems for Arbitrary Choice Sets
• Representation theorems for backward stochastic differential equations
• A general Doob-Meyer-Mertens decomposition for \(g\)-supermartingale systems
• Stochastic differential equations, backward SDEs, partial differential equations
• A Continuous-Time Version of the Principal–Agent Problem
• Aggregation and Linearity in the Provision of Intertemporal Incentives
• Monopolistic competition in electricity networks with resistance losses
• Contracting theory with competitive interacting agents
• Dynamic nonpoint-source pollution control policy: ambient transfers and uncertainty
• Environmental policy design and dynamic nonpoint-source pollution
• Dynamic programming approach to principal-agent problems
• An adverse selection approach to power pricing
• Title not available (Why is that?)
• Title not available (Why is that?)
• Pollution Regulation for Electricity Generators in a Transmission Network
• Optimal electricity demand response contracting with responsiveness incentives
• Mean–field moral hazard for optimal energy demand response management
• Governmental incentives for Green bonds investment
• A mean‐field game approach to equilibrium pricing in solar renewable energy certificate markets

Cited In (5)

• Pollution Regulation for Electricity Generators in a Transmission Network
• Sulfur dioxide compliance of a regulated utility
• Principal-multiagents problem under equivalent changes of measure: general study and an existence result
• Energy transition under scenario uncertainty: a mean-field game of stopping with common noise
• Economics of collective monitoring: a study of environmentally constrained electricity generators

This page was built for publication: Pollution Regulation for Electricity Generators in a Transmission Network

Report a bug (only for logged in users!)Click here to report a bug for this page (MaRDI item Q6042791)