A long term generation expansion planning model using system dynamics – Case study using data from the Portuguese/Spanish generation system

Abstract

This paper describes a long term generation expansion model that uses system dynamics to capture the interrelations between different variables and parameters. Using this model, it is possible to estimate the long term evolution of the demand and of the electricity price that are then used by generation agents to prepare individual expansion plans. These plans are submitted to a coordination analysis to check some global indicators, as the reserve margin and the LOLE. The developed approach is illustrated using a realistic generation system based on the Portuguese/Spanish system with an installed capacity of nearly 120 GW and an yearly demand of 312 TWh in 2010. Large investments were directed in the last 20 years to the Iberian generation system both regarding traditional technologies and dispersed generation (namely wind parks and solar systems). Today, the excess of installed capacity together with the demand reduction poses a number of questions that should be addressed carefully namely to investigate the impact of several options. The planning exercise aims at identifying the most adequate expansion plans in view of the increased renewable generation (namely wind parks). For illustration purposes, we also conducted a sensitivity analysis to evaluate the impact of increasing the installed capacity in wind parks, of internalizing CO2 emission costs and of incorporating a capacity payment. These analyses are relevant in order to get more insight on the possible long term evolution of the system and to allow generation companies to take more sounded decisions.

Modelling the Latvian power market to evaluate its environmental long-term performance

“…Which of these fuels electricity producer will choose, depends on the relative costs of the alternatives. Investment decisions are fundamentally based on total revenues gained by investors [22] and electricity price is an important factor determining the willingness to invest in new electricity generation capacity [27]. In the proposed model electricity generation costs are used as the main indicator based on which investment decision is made.…”

“…A comprehensive literature review of system dynamics applications in the past is given in [20,21]. More recently system dynamics modelling in electricity sector has been used: to analyse generation expansion alternatives in Portuguese/Spanish electricity system [22] and in Switzerland [19]; to examine various investment initiatives in Iranian electricity market [23]; to analyse options for carbon mitigation in Turkish electric power industry over 30 years [24] and to assess the influence of weather condition changes and forward contract conditions on the fluctuation of energy supply and demand in Australia [25]. Finally, energy security issues in Finland's energy system were investigated in [26].…”

Stochastic optimization for electric power generation expansion planning with discrete climate change scenarios

“…Dynamic programming models used in [36][37][38] are combined with discrete time Markov chains, fuzzy technique and Benders decomposition separately. Pereira et al [39] consider system dynamics that could capture the long-term evolution of demand and price, which then are considered in the generation expansion planning process. Ahmed et al [40] use discrete time stochastic processes with a finite probability space.…”

Generation expansion planning in electricity market considering uncertainty in load demand and presence of strategic GENCOs

“…Although, the market price was considered a variable in the bi-level models presented for the production expansion planning problem in [9] and [13] strategic companies were not taken into account in the studies. In some other bi-level models such as [35][36][37]] the supply function model was used to consider the strategic companies.…”

“…To achieve this goal, it is important to have a positive correlation between generation expansion and the demand growth to maintain balance between production and consumption. However, generation expansion planning has become a complex issue in the power generation industry in the competitive space [7][8][9]. In a limited competitive space, it is necessary that the independent system operator is equipped with the capabilities of models and computational tools to enable it to study the behaviour of the expansion of the generation sector in power systems under uncertainty [5,7,[10][11][12][13][14][15][16][17][18][19][20][21][22][23][24][25][26][27].…”