A Nonlinear Model to Maximize Profit of Hydropower Plants in the Long-Run

The problem of hydropower plant profit maximization includes simultaneous programming of optimal utilization of water resources and participation in the power market. The present research was performed on a chain of hydropower plants within the Karoon river basin in Khuzestan Province (Iran) (i.e. Karoon­­ 3, Karoon 1, and Masjid Soleyman hydropower plants). In this research nonlinear programming and dynamic systems were applied to the monthly data for the 2005–2015 period to optimize total revenue. This study calculated optimal water reserve and release of water from the dam reservoir as well as profitability of the considered hydropower plants for a period of 24 months. The profit maximization was performed considering the revenue generated from energy markets, reserve, by-services, and frequency control, along with production costs including, maintenance costs, and start and stop and penalty costs. Results indicated that profitability of the studied power plants was more sensitive to the water inflow of dams rather than fluctuations in electricity price. The results show that by using optimization methods, more profit can be obtained than the current operation of power plants. JEL Classification: C61,  Q49, R38 Keywords: Energy, Profitability, Hydropoer Plants, Long-term, Optimization, Nonlinear Programming