Regional Collaborative Electricity Consumption Management: an Urban Operations Research Model
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Regional Collaborative Electricity Consumption Management: an Urban Operations Research Model Yingxuan Zhang 1,2 Received: 16 June 2020 / Accepted: 2 October 2020/ # Springer Nature Switzerland AG 2020
Abstract Electricity generation can be a major source of pollution. In a compact region where pollutants can easily transfer from one city to another, a unilateral response—on the part of one city to improve its environmental conditions—is often ineffective. This paper develops an urban operations research model for collaborative management of a reduction in electricity consumption. This model internalizes the external costs of electricity consumption in a region; derives the optimal level of electricity consumption; and sets up a scheme to compensate for the externalities of electricity consumption. This analysis is the first urban operations research model for collaborative electricity consumption management, which internalizes the external costs of electricity consumption. This study is also the first attempt to derive the optimal level of electricity consumption within regional collaboration. This is the first time that a scheme to compensate for the externalities is proposed to ensure that agreedupon optimality principle could be maintained throughout the entire duration of cooperation. Keywords Urban operations research . Electricity consumption . Collaborative electricity
consumption management . Environment
1 Introduction Industries consume vast amounts of electricity, and the world’s energy demand for electricity increases year by year. Electricity generation is one of the major emission sources of air pollutants [11, 35]. Moreover, in a compact region where cities cluster together, air pollutants can easily transfer from one city to another. Pollutants emitted in one city will not just affect the city’s own air quality but will also diffuse to its surrounding cities rapidly, therefore, causing the regional environmental problems. A This article is part of the Topical Collection on Business and Management
* Yingxuan Zhang [email protected]
1
SRS Consortium for Advanced Study in Cooperative Dynamic Games, Hong Kong Shue Yan University, 10 Wai Tsui Cres, North Point, Hong Kong
2
Decision Sciences and Modelling Program, Victoria University, Footscray VIC 3011, Australia
SN Operations Research Forum
unilateral response on the part of one city to improve its environmental conditions is often ineffective. Cooperation in environmental control holds out the best promise of effective action. The application of collaborative environmental management schemes can be found in Yeung and Petrosyan [53] and Yeung [52]. However, there are various hurdles in regional collaboration and environmental externality is one of them. The environmental costs of electricity generation are “external” because the real costs are not taken into account when making decisions. Some models have been developed to examine these environmental externalities. For example, Cian and Tavoni [17] examined international emissions trading by
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