Energy Markets: Decision-Making and Risk

Tuesday, April 9, 2013 ( 2:00 pm to 3:00 pm )

Location: Babbio 430

Ricardo A. Collado, Ph.D. Princeton


In the past 20 years, the electric energy industry has evolved into a competitive market intended to promote operational efficiency while guaranteeing the quality of service and low cost. This competitive energy market provides incentives for capital formation and opportunities for businesses to alleviate the cost of energy consumption.

Besides its advantages, contemporary energy markets pose decision problems that are inherently stochastic with uncertainty and risk at every single step. For this reason, business consumers in an energy market should control their exposure to cost and demand variability.

In this talk we introduce the energy market model used in US East Coast and discuss some important decision-making problems faced in the market. We introduce a novel way of facing risk through the use of risk measures and dynamic programming.


Dr. Collado is a Professional Specialist at Princeton Laboratory for Energy Systems Analysis (PENSA) from the Department of Operations Research & Financial Engineering at Princeton University. In 2001 he obtained his diploma in Mathematics and Computer Science from The University of Puerto Rico. He went on to complete the requirements for the Master's in Pure Mathematics and by 2010 Dr. Collado completed his doctoral dissertation at the Rutgers Center for Operations Research, at

Rutgers University. Dr. Collado's research focuses on the science of decision-making in the presence of risk with applications to finance, management science, competitive energy markets, and homeland security. At PENSA he is heavily involved in research in energy, with problems spanning energy policy models, dynamic pricing and demand response, power grid modeling, and optimizing the design and control of storage portfolios.