Identification of optimal recourse strategies for power generation under a government-guided coal-pricing mechanism in north China

• An inexact two-stage chance-constrained programming model (ITSCCP) was developed.
• The model is an integration of multiple programming methods and China’s special coal-pricing mechanism.
• Multiple uncertainties could be effectively tackled.
• ITSCCP was applied to a case of long-term management of coal and power in north China.

In this research, an inexact two-stage chance-constrained programming model (ITSCCP) was developed for supporting the planning of coupled coal and power management systems in China based on the integration of multiple programming methods and China’s special coal-pricing mechanism. Multiple uncertainties that were expressed as interval numbers and probability density functions could be effectively tackled. Recourse decisions for power generation with a certain level of economic penalties could be identified to evaluate economic penalties associated with violation of original coal-pricing contracts between coal suppliers and power plants. Also, risks associated with the violation of coal transportation capacities were quantified and analyzed. The developed ITSCCP was applied to a case of long-term management of coal and power in north China. Interval solutions associated with different risk levels of transportation-supply constraint violations under varying power-generation demands were obtained. The solutions indicated that they could be used for generating decision alternatives and helping decision makers identify desired strategies under multiple social-economic, environmental and system-reliability constraints. Moreover, ITSCCP could not only provide in-depth analysis of various policy scenarios associated with different levels of economic penalties when the promised targets were violated, but also identify optimal solutions under the existing government-guided coal-pricing mechanism.