Deciding on Micro-CHP; A Multi-Level Decision-Making Approach

Micro combined heat and power (micro-CHP) is a promising, more fuel efficient, technology that could change the energy infrastructure as a whole. This paper describes the possible decision-making that results from micro-CHP introduction. The focus lies on the supplier-household interaction. Decisions made by supplier (price of electricity to/from households) influence decisions of households (1. micro-CHP power level and 2. amount of discharged heat) and determine the supplier´s operational costs. When the supplier takes into account the cost optimization of households (that is based on the supplier´s decision) in making his price-setting decisions, the problem can be described as a multi-level decision-making (MLDM) problem. We describe how the problem can be modelled and present a solution strategy which considers a combination of two objective functions that are subject to a set of constraints. Results of supplier price-setting are presented as well. Solving the problem via the MLDM approach is expected to lead to improved decision-making and a better performance of the supplier. Applying MLDM to the decision problem presented here is novel and can contribute to dealing with decision-making complexity in the energy infrastructure in general