TY - GEN
T1 - Flexibility and real options analysis in design for long-term generation expansion planning of power grids
AU - Rahmat, Muhammad
AU - Caunhye, Aakil Mohammad
AU - Cardin, Michel-Alexandre
PY - 2017/12/1
Y1 - 2017/12/1
N2 - In recent years, the electricity industry has seen a drive towards the integration of renewable and environmentally friendly generation resources to power grids. These resources have highly variable availabilities. This work proposes a stochastic programming approach to optimize generation expansion planning (GEP) under generator supply capacity uncertainty. To better capture upside opportunities and reduce exposure to downside risks, flexibility is added to the GEP problem through real options on generator addition, which are to be exercised after uncertainty realizations. In addition, with the end goal of providing decision makers with easy-to-use guidelines, a conditional-go decision rule, akin to an if-then else statement in programming, is proposed whereby the decision maker is provided with a threshold of excess total generator capacity from the previous time period, below which a predetermined generator addition plan (the option) is exercised. The proposed methodology and its decision rule are implemented in a real-world study of Midwest U.S. Comparisons are made to quantify the value of flexibility and to showcase the usefulness of the proposed approach.
AB - In recent years, the electricity industry has seen a drive towards the integration of renewable and environmentally friendly generation resources to power grids. These resources have highly variable availabilities. This work proposes a stochastic programming approach to optimize generation expansion planning (GEP) under generator supply capacity uncertainty. To better capture upside opportunities and reduce exposure to downside risks, flexibility is added to the GEP problem through real options on generator addition, which are to be exercised after uncertainty realizations. In addition, with the end goal of providing decision makers with easy-to-use guidelines, a conditional-go decision rule, akin to an if-then else statement in programming, is proposed whereby the decision maker is provided with a threshold of excess total generator capacity from the previous time period, below which a predetermined generator addition plan (the option) is exercised. The proposed methodology and its decision rule are implemented in a real-world study of Midwest U.S. Comparisons are made to quantify the value of flexibility and to showcase the usefulness of the proposed approach.
KW - linear programming
KW - transmission expansion
KW - coordination
KW - reliability
KW - system
U2 - 10.1115/DETC2017-67494
DO - 10.1115/DETC2017-67494
M3 - Conference contribution
SN - 9780791858219
T3 - Proceedings of the ASME Design Engineering Technical Conferences
SP - 1
EP - 8
BT - Proceedings of the ASME International Design Engineering Technical Conferences and Computers and Information in Engineering Conference 2017
PB - American Society of Mechanical Engineers(ASME)
T2 - ASME International Design Engineering Technical Conferences / Computers and Information in Engineering Conference (IDETC/CIE 2017)
Y2 - 6 August 2017 through 9 August 2017
ER -