Professional Documents
Culture Documents
P. CAPROS
Regulatory Authority of Energy, Greece, and
Department of Electrical Engineering, National Technical University of Athens, Athens, Greece
Abstract. The European policy target of substantially increasing the share of renewable energy in electricity
generation, in combination with national subsidization support schemes, has strongly motivated private
investors towards this business sector. In Greece, this interest is particularly apparent in the case of wind
energy exploitation, due to a favourable legislative framework and the important wind potential available
in several Greek regions. In such endowed regions, a very high number of applications were submitted to
the competent authority, most of which compete for the same most attractive (windy) sites. The selection
among these applications is a multicriteria problem that has been solved with the support of a Decision-Aid
tool combining the multicriteria classification method ELECTRE-TRI with Integer Linear Programming.
The developed approach takes into account both, the performances of the applications to the evaluation
criteria, as well as a number of technical and policy constraints.
Keywords: multiple criteria, ELECTRE-TRI, integer programming, fractional programming, project se-
lection
Introduction
The energy sector is proved to be a privileged field of application for Multiple Criteria
Decision Aid (MCDA), mainly because of the several aspects (economic, environmental,
social) that should be taken into account in energy planning and decision making. The
multicriteria methods applied belong to the two broad categories of MCDA including,
on the one side multiobjective programming, e.g., [5,9,10] and on the other, techniques
designed to select among discrete alternatives, e.g., [8,16,17].
Project selection, constitutes a typical multicriteria decision situation where the
decision-maker is called to single out the most attractive alternative(s) among a large
number of discrete candidate solutions. The decision situation becomes more complex
if, in addition to the multiple evaluation criteria, the decision-maker has to comply with
specific limitations imposing a combinatorial consideration of the examined alternatives.
In this particular case, the use of a MCDA ranking method is not enough to provide the
∗ Corresponding author.
160 MAVROTAS ET AL.
The problem faced refers to the selection among a large number of applications concern-
ing the installation of wind power plants in a particular Greek prefecture possessing rich
wind energy potential. In the framework created in the recently liberalised Greek elec-
tricity market, private investors are strongly activated towards wind energy exploitation,
mainly because the associated investment cost is not prohibitive, while there is a rather
favourable legislative framework securing satisfactory rates of return.
The Regulatory Authority of Energy (RAE), a body recently established for the
regulation of the liberalized Greek electricity market, is responsible to license relevant
projects, after checking for the investor’s credibility and provided the project conforms
with specific technical and economic efficiency requirements. The particular case study
presented in this paper, was ordered by RAE in order to evaluate 113 applications sub-
mitted by 23 companies. The problem is that the number of applications and their re-
spective total power (2340 MW) is by far exceeding the grid’s available capacity in
that particular prefecture (300 MW), while in the most endowed areas there are several
projects competing for the same piece of land.
RAE has established three evaluation criteria: the Internal Rate of Return (IRR) of
the investment, the maturity of the certification procedure (MCP), and the quality of the
application (AQ). It should be noted that the IRR criterion indirectly reflects the char-
acteristics of the site, in the sense that wind parks located in more windy areas, will be
more productive in terms of total electricity production, and thus, are capable for a better
exploitation of the invested capital. The two last criteria are expressed in a qualitative
scale ranging from 1 to 10. In the MCP criterion 10 is assigned to the applications having
already acquired all necessary licences from other involved authorities (local authorities,
Ministry of Environment, Archeological Council, etc.), whereas in the AQ criterion to
those characterised by a high quality and reliability of the submitted data. Obviously the
score 1 is assigned to the applications presenting the worst performances in each of the
two above criteria.
The main reason for selecting the ELECTRE-TRI method is that given the small
number and the rather subjective evaluations in the last two criteria, a high discrimina-
tion of applications was not sought by the DMs. This is because the scores obtained by
the MCDA procedure will be used as objective function coefficients in the IP program of
the next step. IP formulation and in general MP formulation are very sensitive in the co-
efficients of the objective function and cannot take into account indifference thresholds.
For example, a project with score 2.45 will be always preferred from a project with score
2.44 although their difference is negligible. Less discriminative power in the coefficients
of the objective function results in more alternative optimal solutions, which offer more
space to the DMs for their final choice. This was desirable in the particular application
study, because alternative optimal solutions are then examined more thoroughly, and the
DM is directly involved in the final selection.
In the simplest case, the problem would have been solved by means of a multicri-
teria ranking model by simply taking the best applications that add up to the capacity
162 MAVROTAS ET AL.
limit. Unfortunately, this is not the case. There are specific policy requirements imposed
by RAE, along with some additional technical limitations, which cannot be incorporated
in the ELECTRE-TRI model. The policy requirements aim to prevent monopoly situa-
tions in the emerging market of wind power installations. Accordingly, a single company
should not acquire the right to invest in units representing more than 33% of the maxi-
mum available capacity. The technical limitations refer to the possible overlaps between
two or more of the submitted applications, i.e. two or more companies interested in in-
stalling wind parks in the same site. If the common area between any two applications is
relatively small, both applications may be approved by accordingly reducing their total
capacity. On the contrary, if the overlapped area is relatively big, approval of the one
application necessarily means the rejection of the other application.
2. Model formulation
ELECTRE-TRI is used in ordered Multiple Criteria Sorting Problems (MCSP) for as-
signing alternatives to pre-defined categories, by comparing each alternative with the
profiles defining the limits of the categories and by exploiting a preference model of the
DM informing on weights and thresholds of criteria [12].
The MCSP problem is defined as follows: a set A of n alternatives a1 , a2 , . . . , an
are evaluated with respect to a set G of m criteria g1 , g2 , . . . , gm , in order to be assigned
in p + 1 categories C1 , C2 , . . . , Cp+1 by means of a set B of p profiles b1 , b2 , . . . , bp
determined for each criterion and delimiting the specified categories. In addition, the
decision maker should provide preferential information by determining for each criterion
weights of importance wj , as well as a set of indifference (qj ), preference (pj ) and veto
(vj ) thresholds associated with every profile bh and expressing the imprecise nature of
the scores gj (a). In the present case no veto thresholds were set.
The problem is solved following a stepwise procedure:
1. First, the score g(a) = (g1 (a), . . . , gm (a)) of the alternative a is compared to the
profile bh , in each distinct criterion, for determining the partial concordance indices
cj (a, bh ) and cj (bh , a) defined within the interval [0, 1] and expressing to which
extent “a outranks bh ” and “bh outranks a” in the criterion j .
2. The next step consists in the computation of the overall concordance indices c(a, bh )
and c(bh , a), defined also within the interval [0, 1], and denoting to which extent “a
outranks bh ” and “bh outranks a” taking account of all criteria.
3. Binary outranking relations S are then constructed, denoting preference and indif-
ference between alternatives and profiles (for a specific cutting level λ).
4. Finally, the above outranking relations are further exploited in order to assign each
alternative to one of the specified categories. Two assignments are obtained:
COMBINED MCDA–IP APPROACH 163
Table 1
Scenarios for the weights of the evaluation criteria.
IRR MCP AQ
Scenario 1 0.4 0.3 0.3
Scenario 2 0.3 0.4 0.3
Scenario 3 0.4 0.4 0.2
Scenario 4 0.5 0.2 0.3
for both assignments and is repeated for each one of the four weighting scenarios. The
overall score for each alternative is obtained by summing up the eight scores (4 scenarios
× 2 assignments). The maximum score for an alternative is 40 (classified as “very good”
in both pessimistic and optimistic assignments in all four weighting scenarios). In the
same way, the minimum score for an alternative is 8. In our case it was decided in
collaboration with the DMs that we may consider a linear uniform preference among
classes (e.g., difference between “good” and “medium” is equivalent to the difference
between “medium” and “bad”). Therefore, with this assumption, we can translate the
ordinal evaluations into cardinal scores.
The obtained multicriteria scores are first used for a screening of the applications,
in order to discard from further consideration applications with poor overall perfor-
mance. Next, these scores are used as coefficients in the objective function of the IP
model described in the following subsection.
The reduced set of applications, qualified from ELECTRE-TRI, is modeled with 0–1
decision variables. Xij denotes the j th application of the ith company. If Xij = 1 the
corresponding application is approved, otherwise, if Xij = 0 it is rejected.
The problem is no more linear because the denominator of the objective function con-
tains decision variables. In order to overcome this difficulty the Charnes–Cooper trans-
formation introducing an auxiliary decision variable T is used:
1
T = n mi . (3)
i=1 j =1 Xij
The variable Xij is replaced in the model by the variable Yij , defined by the following
relation
Yij = T · Xij . (4)
According to equations (3) and (4) the Yij must fulfill the following relation
n
mi
Yij = 1. (5)
i=1 j =1
Charnes and Cooper transformation regards continuous Xij . In the case of binary vari-
ables and according to equation (4), Yij may be either 0 or T . Therefore, the transfor-
mation must be suitably adapted to deal with discontinuous variables. It is suggested
to replace the nonlinear equation (4) with an equivalent set of three linear equations
(see [18,19]):
T − Yij 1 − Xij , (7)
Yij T , (8)
Yij Xij . (9)
Consequently, at a cost of increasing the number of decision variables and constraints
the FIP problem can be modeled and solved through an equivalent MILP problem.
2.2.2. Constraints
Except the described, “artificial” constraints that arise from the transformation of the FIP
problem to the equivalent MILP problem, the model includes also constraints imposed
by the specific decision situation.
(a) Overlapping
As already mentioned, it may happen that two or more applications from different com-
panies present a major or minor overlap as shown in figure 2. In minor overlaps all
involved applications may be approved with the small common area being evenly dis-
tributed between the two investors. Such an agreement is difficult to arrive in the case of
major overlaps, mainly because not all the area in a site is equally attractive.
166 MAVROTAS ET AL.
Therefore, in the case of major overlaps the competing applications are consid-
ered as mutually exclusive alternatives. These conditions are translated to the following
constraints:
major overlap: XA + XB 1, (10)
minor overlap: XA + XB − 2XAB 1 and (11)
XA + XB − 2XAB 0. (12)
XAB is a 0–1 variable taking the value 1 only if both XA and XB are equal to 1, otherwise
it becomes equal to 0. If XAB = 1 the common area AB is distributed evenly between
the investors A and B by assuming that the installed power is proportional to the area
occupied.
For overlaps involving more than two applications (see figure 3) the following for-
mulation is provided:
In case 1, it is clear that A cannot be approved together with B or C, whereas B
and C may both be approved. Thus the resulting constraint is formulated as follows:
2XA + XB + XC 2. (13)
In case 2, applications A, B and C are mutually exclusive and the corresponding
constraint becomes
XA + XB + XC 1. (14)
COMBINED MCDA–IP APPROACH 167
where totcap is the total allowable capacity in MW, pij is the power in MW of the j th
application form the ith company, tovpk is the common power in MW of the minor
overlap k, ov is the number of minor overlaps and XOVPk is the 0–1 variable which
indicates if both of the involved applications in a minor overlap, are approved. The
“greater than or equal” sign of the inequality seems to be counter-intuitive regarding the
direction of the objective function. However, given the fractional form of the objective
function, it is appropriate because it forces the model to use up the available capacity.
Otherwise, the maximization of the average score with a “less than or equal” inequality
in equation (15), would result in selecting only those applications with the maximum
score, no matter how much power they accumulate. The specific constraint is considered
as a “soft” constraint that allows some flexibility in the vicinity of 300 MW. Therefore
totcap is treated parametrically to vary from 280 to 320 MW in steps of 10 MW. The
optimal solutions from the five runs are compared to each other and the solution with the
highest value of the objective function is selected.
where ovi is the number of overlaps of the ith company, ovpik is the power (MW) in kth
minor overlap that is not attributed to ith company.
3. Model implementation
The first phase of the method was implemented with the ELECTRE-TRI 2.0a soft-
ware [10]. 62 applications, with scores from 20 to 40, were qualified for the next phase,
while the 51 remaining applications, with scores bellow 20, were discarded and no fur-
ther considered.
The developed MILP model has 130 variables of which 67 are binary (62 of type
Xij and 5 of type XOVPk ) and 63 continuous (62 of type Yij and the auxiliary variable T ).
The constraints of the model are 243, namely, the linking equation (5), 62 inequalities
168 MAVROTAS ET AL.
Table 2
The results of the MILP model in the parametric analysis.
Lower limit of equation (15) Total installed Number of approved Value of objective
(MW) capacity (MW) applications function
280 286.45 19 34.21
290 290.45 20 34.00
300 300.45 20 33.67
310 310.45 21 33.67
320 320.85 20 33.30
of type (7), 62 of type (8) and 62 of type (9), 10 inequalities for minor overlaps defined
in (11) and (12), 25 for major overlaps defined in (13) or (14), 1 for the total allowable
capacity defined in (15) and 20 for maximum company’s capacity as given in (16).
The model was created and solved in GAMS [3]. The solution time was 1 10 in an
AMD Athlon at 1400 MHz. The solution of MILP problems by commercial packages,
does not guarantee the exclusivity of the optimal solution. Therefore, additional runs
with different branch and bound priorities or using lexicographic optimization must be
performed in order to reveal alternative optima. The results of the parametric analysis
performed for the soft constraint (15) as presented to the decision maker are given in
table 2. It can be seen that among the obtained optimal solutions, the one presenting
the maximum average multicriteria score includes 19 applications from 8 companies
summing up to 286.45 MW. On the other side, it is possible to slightly surpass the limit
of 300 MW by introducing one or two more applications, while the corresponding score
is not significantly reduced. It should be noted that in the optimal solution, a distribution
between involved investors occurs in only one among the five cases of minor overlaps.
The maximum share on the total installed power assigned to a single company is 32%.
In general, the results are judged as very satisfactory since all applications with
relatively good performance are present in the solution, unless the overlap constraints or
the maximum company’s capacity constraints prevent it. The ongoing process of license
giving by RAE is mainly based on the above results. In addition, RAE has proceeded to
a more thorough examination of the obtained alternative optimal solutions.
4. Concluding remarks
The combination of the two methodological tools (MCDA and integer programming) can
effectively handle specific decision-making problems, where in addition to the consid-
eration of multiple criteria the alternatives must obey to particular constraints. Besides
the example from the energy sector presented in this paper, such an approach is suitable
for funding problems, in which the selection of the candidate companies has to take into
account specific policy constraints regarding the sectoral or geographical distribution of
the available funds.
In the present paper, the problem of allocating wind parks in a Greek prefecture
is effectively solved, using the developed methodology. More specifically, ELECTRE-
COMBINED MCDA–IP APPROACH 169
TRI is very suitable in problems following the sorting problematic, especially if the
evaluation criteria do not allow for discriminating among more or less equivalent alter-
natives. In addition, the so obtained multicriteria scores are more robust. Since these
scores are used as coefficients of the MILP model’s objective function in the second
phase of the analysis, final results become also more robust. An innovative feature of the
developed model is the simultaneous consideration of a fractional objective along with
binary variables. The integer fractional LP problem is transformed to the equivalent
mixed integer LP problem by means of the well known Charnes–Cooper transformation
for fractional programming, along with Williams’ guidelines for converting a nonlinear
constraint (which contains a product of a binary with a continuous variable) into three
linear ones.
Finally, further considerations for this research area are the following: different
variations of the above described solution approach may also be tested. For example,
the multiple criteria scores, derived from each set of weights in ELECTRE-TRI, can be
used separately to construct the corresponding objective function, and thus to directly
link the importance of the weights to the final allocation. Moreover, alternative MCDA
methods may be used to produce the multicriteria scores used in the IP problem’s objec-
tive function.
References
[1] M. Abu-Taleb and B. Marescal, Water resources planning in the Middle East: Application of the
PROMETHEE V multicriterion method, European J. Oper. Res. 81 (1995) 500–511.
[2] C. Arondel and P. Girardin, Sorting cropping systems on the basis of their impact on groundwater
quality, European J. Oper. Res. 127 (2000) 467–482.
[3] A. Brooke, D. Kendrick and A. Meeraus, GAMS: A User’s Guide (Scientific Press, San Francisco,
CA, 1988).
[4] A. Charnes and W.W. Cooper, Programming with linear fractional functionals, Naval Res. Logistics
Quart. 9 (1962) 181–186.
[5] J. Climaco, C.H. Antunes, A.G. Martins and A.T. Almeida, A multiple objective linear programming
model for power generation expansion planning, Internat. J. Energy Res. 19 (1995) 419–432.
[6] W.D. Cook and R.H. Green, Project prioritisation: A resource-constrained data envelopment analysis
approach, Soc. Econom. Planning Sci. 34 (2000) 85–99.
[7] D. Diakoulaki and V. Hontou, A multicriteria approach to burden sharing among industrial branches
for combating climate change, Clean Technol. Environm. Policy (2002) accepted.
[8] E. Georgopoulou, Y. Sarafidis and D. Diakoulaki, Design and implementation of a group DSS for
sustaining renewable energies exploitation, European J. Oper. Res. 109 (1998) 483–500.
[9] I. Kavrakoglu and G. Kiziltan, Multiobjective strategies in power systems planning, European J. Oper.
Res. 12 (1983) 159–170.
[10] G. Mavrotas, D. Diakoulaki and L. Papayannakis, An energy planning approach based on mixed 0–1
MOLP, Internat. Trans. Oper. Res. 6 (1999) 231–244.
[11] V. Mousseau, R. Slowinski and P. Zielniewics, ELECTRE TRI 2.0a: Methodological guide and user’s
manual, Doc. du LAMSADE no. 111, Université Paris-Dauphine, France (1999).
[12] V. Mousseau, R. Slowinski and P. Zielniewics, A user-oriented implementation of the ELECTRE TRI
method integrating preference elicitation support, Comput. Oper. Res. 27 (2000) 757–777.
[13] M. Oral, O. Kettani and U. Cinar, Project evaluation and selection in a network of collaboration:
A consensual disaggregation multi-criterion approach, European J. Oper. Res. 130 (2001) 332–346.
170 MAVROTAS ET AL.
[14] K. Raju Srinivasa, L. Duckstein and C. Arondel, Multicriterion analysis for sustainable water re-
sources planning: A case study in Spain, Water Resourc. Managm. 14 (2000) 435–456.
[15] B. Roy, The outranking approach and foundations of ELECTRE methods, Theory Decision 31(1)
1991 49–73.
[16] B. Roy and D. Bouyssou, Comparison of two decision-aid models applied to a nuclear power plant
siting example, European J. Oper. Res. 25 (1986) 200–215.
[17] J. Siskos and P. Humbert, Multi-criteria analysis of the impact of energy alternatives: A survey and a
new comparative approach, European J. Oper. Res. 13 (1983) 278–299.
[18] H.P. Williams, Model Building in Mathematical Programming (Wiley, New York, 1985).
[19] T.-H. Wu, A note on a global approach for general 0–1 fractional programming, European J. Oper.
Res. 101 (1997) 220–223.
[20] W. Yu, ELECTRE TRI: Aspects méthodologiques et manuel d’utilisation, Doc. du LAMSADE no.
74, Université Paris-Dauphine, France (1992).