Two-phase optimization of coal strategies at a power station

Development of optimal coal mining and stockpiling strategies for a new 960 MW thermal power station depends strongly on the operation of New Zealand's mixed hydro/thermal power system. To overcome the large dimensionality of the problem the optimization proceeds in two phases for each future scenario studied. Phase 1 finds optimal hydro operating strategies with thermal generation in merit order of marginal fuel costs. It uses stochastic dynamic programming. The hydro generating strategies are used as input to the phase 2 stochastic simulation of the coal mining and stockpiling operation at the new thermal station. Finally, a strategy is identified which is a priori best over all future scenarios of industrial development and oil prices studied.