Stochastic Control and Pricing for Natural Gas Networks

TL;DR

This paper develops stochastic control policies for natural gas networks to manage uncertainty in gas extraction, ensuring feasible real-time operation and introducing a stochastic pricing scheme that accounts for uncertainty contributions.

Contribution

It introduces a chance-constrained optimization framework for real-time control and pricing in natural gas networks, incorporating uncertainty and variance considerations.

Findings

Optimized control policies ensure network feasibility under uncertainty.

A stochastic pricing scheme compensates assets for uncertainty contributions.

Economic analysis shows improved efficiency and revenue adequacy.

Abstract

We propose stochastic control policies to cope with uncertain and variable gas extractions in natural gas networks. Given historical gas extraction data, these policies are optimized to produce the real-time control inputs for nodal gas injections and for pressure regulation rates by compressors and valves. We describe the random network state as a function of control inputs, which enables a chance-constrained optimization of these policies for arbitrary network topologies. This optimization ensures the real-time gas flow feasibility and a minimal variation in the network state up to specified feasibility and variance criteria. Furthermore, the chance-constrained optimization provides the foundation of a stochastic pricing scheme for natural gas networks, which improves on a deterministic market settlement by offering the compensations to network assets for their contribution to uncertainty and variance control. We analyze the economic properties, including efficiency, revenue adequacy and cost recovery, of the proposed pricing scheme and make them conditioned on the network design.