Modeling generation expansion in the context of a security of supply mechanism based on long-term auctions. Application to the Colombian case

Rodilla, Pablo; Batlle, Carlos; Salazar, J. Leonard; Sanchez, J.J.

doi:10.1016/j.enpol.2010.09.027

Cited by 10 publications

(7 citation statements)

References 7 publications

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“…This term represents the dispersion of the inframarginal rent caused by fluctuation in the energy reserve which is, in turn, derived from the uncertainty about demand growth rate. As demonstrated in (23), the first term of (22) is obtained by substituting (7) into (17).…”

Section: Risk Aversion Representationmentioning

confidence: 99%

Simulation model to assess the performance of a forward capacity market for hydro-based systems

Zucarato

Silva

2012

IET Gener. Transm. Distrib.

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Faced with the need for additional generation resources to meet growing demand, many market designers point out the need for a mechanism to coordinate and incentive capacity investment. Several variations of capacity mechanisms have been proposed for this purpose. This study presents the theoretical basis of how concepts of a forward capacity market (FCM) can be applied for hydrothermal systems with significant portion of hydro generation, and a dynamic simulation model to assess the performance of an FCM under different levels of competitive conditions, ranging from monopoly to perfect competition. At each annual step of the simulation, the proposed model uses game theory to describe the strategic interdependence among the generators, which results in an optimisation problem that allows finding the total amount of new capacity to be added to the system. The solution of the game also takes into account the behaviour of entrant generators when faced with the uncertainties regarding demand growth and future water inflows. The main contribution of this study is to model the strategic behaviour of investors in generation. The proposed model is capable of reproducing classical economic results for complex cases such as asymmetric oligopoly, which considers uncertainty in the demand growth rate and risk averse players. NomenclatureIndexes i index of the entrant generator y years of the simulation horizon t years of the planning horizon Parameters Y length, in years, of the simulation horizon T length, in years, of planning horizon d y demand growth rate (%) r i risk aversion parameter of the generator i FC i fixed cost of the generator i ($/MWh) VC i variable cost of the generator i ($/MWh) C i total cost of generator i ($/MWh) R long run mean for the energy reserve h mean reversion rate for the energy reserve s energy reserve volatility h speed of reversion for the energy reserve j discount rate Variables D y annual energy demand (average value) for the year y (MWh) D A,y real demand for the year y (MWh)

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Section: Risk Aversion Representationmentioning

confidence: 99%

Simulation model to assess the performance of a forward capacity market for hydro-based systems

Zucarato

Silva

2012

IET Gener. Transm. Distrib.

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“…Among the limited academic literature focused on auctions for RES support in South America, Azuela et al [8] discussed the Brazilian experience with energy auctions in comparison to China and India, Moreno et al [9] examined the lessons learned from Chilean and Brazilian auctions, Mastropietro et al [10] reviewed the RES auction mechanisms applied in South America, and Rodilla et al [11] modeled generation expansion using long-term energy auctions as appropriate economic incentives in the case of Colombia. In another study, Del Rio [12] examined several auction designs, including renewable auctions in Argentina, Chile, Uruguay, and Peru, analyzing the advantages and drawbacks of different design elements based different criteria for evaluation.…”

Section: Introductionmentioning

confidence: 99%

Policy Makers’ Perspectives on the Expansion of Renewable Energy Sources in Chile’s Electricity Auctions

et al. 2019

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Chile has become one of the first few countries where renewable sources compete directly with conventional generation in price-based auctions. Moreover, the results of energy auctions during the last few years show a remarkable transition from conventional fossil fuels to renewable energies. In fact, the energy auction in 2017, to provide energy to customers from distribution companies, achieved a massive expansion in renewable technology at one of the lowest prices in the world. These positive results prompted the question if such results were permanent or temporal due to factors with limited effects. In this regard, this paper studies the key factors that drove the significant rise of renewable technologies in Chilean energy auctions, obtaining valuable lessons for regulators, not only in Chile, but also in the region and the world. For this purpose, we considered a well-proven method based on a hybrid multicriteria decision-making model to examine and prioritize the main drivers of the expansion of renewables in auctions. The results showed that some specific characteristics of the auction design, particularly the hourly supply blocks, the lead time for project construction, and contract duration, were the most significant drivers for the expansion of renewables in energy auctions. Moreover, the results showed that, provided that the auction design accommodates for such drivers, solar energy ends up as the most attractive technology in the Chilean auctions. The research also shows the main findings are robust by the application of a probabilistic sensitivity analysis.

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“…In this mechanism, the independent system operator estimates the amount of the required capacity, one to five years before the delivery year, and the amount of the required GC is procured by using various auction methods based on downward‐sloping demand curve [18, 19]. The new and existing generating units can participate in the auction mechanism, which is used in Colombia [20], PJM [21], NYISO [10], and ISO‐NE [22] markets.…”

Section: Introductionmentioning

confidence: 99%

Capacity certificate, a step forward in the Iranian power market

Heidarizadeh

Ahmadian

2019

IET Generation Trans & Dist

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Based on theoretical studies and practical experiences in power systems, electricity market by itself cannot create an effective condition for optimal investment in generation capacity (GC) expansion. On the other hand, the political, social, and economic consequences of shortage of power generation are inevitable under any condition. Thus, several incentives have been introduced to support investment in GC. Currently, the capacity payment mechanism is used for this purpose in the Iranian power market. In addition, the mechanism, along with its benefits, is suffering from some inadequacies and inefficiencies. The present study aimed to introduce Iranian power market and the specifications of the capacity mechanism used in this market. Accordingly, a new incentive called 'Capacity Certificate' which has been adopted for Iranian power market is modelled and analysed, along with explaining its characteristics. Regarding the advantage of system dynamics, the effect of this mechanism on the long-term performance of the power market was evaluated from the perspective of the GC expansion and was compared with the capacity payment mechanism. The results revealed that using the capacity certificate mechanism in Iranian power market can be considered as a step forward toward a better system reserve and lower cost.

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Modeling generation expansion in the context of a security of supply mechanism based on long-term auctions. Application to the Colombian case

Cited by 10 publications

References 7 publications

Simulation model to assess the performance of a forward capacity market for hydro-based systems

Simulation model to assess the performance of a forward capacity market for hydro-based systems

Policy Makers’ Perspectives on the Expansion of Renewable Energy Sources in Chile’s Electricity Auctions

Capacity certificate, a step forward in the Iranian power market

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