Handling of rationing / extreme prices

Rationing price

Note that the rationing price defined under PREF in Vansimtap/Prodrisk (setting-attribute deficitPowerCost in the Prodrisk API) must be higher than the highest price in the input price scenarios for the models to work as intended. If this is not the case, the rationing price will work as a price cap, and one will therefore get lower water values than what is correct based on the input prices. The rationing price may be set multiple times higher than the highest price, but we recommend not setting it too high (e.g., 100 times higher). How cuts from Prodrisk captures and emphasizes rationing (or extreme prices)

In the first case it is the task of the market models/prognosis models making the price input to capture the probability (number of scenarios) and consequence (rationing price) ofrationing/extrem prices.

Let us say this is done, and we are left with a stochastic price input with one scenario with a very high price P in week J. We are interested in the strategy for week 1 which gives input to the daily operation.

With standard runs of Genpris one gets 7 price nodes per week, where 2 nodes describe the extreme scenarios (max/min).

In the price model which comes from Genpris we therefore get for week J one extreme price node (number 7) with price P. However, there is no possible transitions from weeks t<J to this node, and calculations for node 7 in week J does therefore not contribute to the strategy for week 1.

The extreme price P will contribute in the calculation of the average price of node 6. There are transitions for weeks t<J to node 6 in week J. Therefore the calculations for node 6 will contribute to the strategy of week 1.