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When doing nothing may be the best investment action: Pessimistic anticipative power transmission planning

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  • Pozo, David
  • Sauma, Enzo
  • Contreras, Javier

Abstract

A fundamental challenge in power system planning is how to handle the interactions of participants’ behaviors in deregulated markets. This is important due to the high cost involved in their decisions. Proactive or anticipative transmission expansion planning models have been proposed by some authors to jointly model the interactions among deregulated electricity market participants making market-driven investment decisions. Several works have shown that a Transmission Network Planner can increase social welfare by anticipating line expansion planning to generation expansion equilibrium and market outcomes. However, proactive transmission expansion decisions may lead to suboptimal solutions when the generation expansion equilibrium problem have multiple solutions (i.e., leading to higher total costs and lower social welfare). We propose a methodology to study the potential impacts of proactive expansion planning on generation expansion decisions. The resulting formulation is stated as a mathematical program subject to an equilibrium problem with equilibrium constraints (EPEC). To deal with this problem, we also propose an approach to derive tractable EPEC solutions with global optimality guaranteed based on a column-and-row generation algorithm. Our numerical results shows that a proactive investment plan can lead to higher total cost than not investing at all because of the existence of multiple market-driven generation expansion equilibria. We show that the proposed algorithm significantly reduce the time of computation up to two orders of magnitude with respect to existing methodologies.

Suggested Citation

  • Pozo, David & Sauma, Enzo & Contreras, Javier, 2017. "When doing nothing may be the best investment action: Pessimistic anticipative power transmission planning," Applied Energy, Elsevier, vol. 200(C), pages 383-398.
    • Handle: RePEc:eee:appene:v:200:y:2017:i:c:p:383-398
    DOI: 10.1016/j.apenergy.2017.05.030
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    Citations

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    Cited by:

    1. Dranka, Géremi Gilson & Ferreira, Paula & Vaz, A. Ismael F., 2021. "A review of co-optimization approaches for operational and planning problems in the energy sector," Applied Energy, Elsevier, vol. 304(C).
    2. Caunhye, Aakil M. & Cardin, Michel-Alexandre, 2018. "Towards more resilient integrated power grid capacity expansion: A robust optimization approach with operational flexibility," Energy Economics, Elsevier, vol. 72(C), pages 20-34.
    3. Quiroga, Daniela & Sauma, Enzo & Pozo, David, 2019. "Power system expansion planning under global and local emission mitigation policies," Applied Energy, Elsevier, vol. 239(C), pages 1250-1264.
    4. Matamala, Carlos & Moreno, Rodrigo & Sauma, Enzo, 2019. "The value of network investment coordination to reduce environmental externalities when integrating renewables: Case on the Chilean transmission network," Energy Policy, Elsevier, vol. 126(C), pages 251-263.
    5. Farrokhifar, Meisam & Nie, Yinghui & Pozo, David, 2020. "Energy systems planning: A survey on models for integrated power and natural gas networks coordination," Applied Energy, Elsevier, vol. 262(C).
    6. Gonzalez-Romero, Isaac-Camilo & Wogrin, Sonja & Gomez, Tomas, 2021. "Transmission and storage expansion planning under imperfect market competition: Social planner versus merchant investor," Energy Economics, Elsevier, vol. 103(C).
    7. Guo, Hongye & Chen, Qixin & Xia, Qing & Kang, Chongqing, 2019. "Electricity wholesale market equilibrium analysis integrating individual risk-averse features of generation companies," Applied Energy, Elsevier, vol. 252(C), pages 1-1.
    8. Fernanda Nakano Kazama & Aluizio Fausto Ribeiro Araujo & Paulo Barros Correia & Elaine Guerrero-Peña, 2021. "Constraint-guided evolutionary algorithm for solving the winner determination problem," Journal of Heuristics, Springer, vol. 27(6), pages 1111-1150, December.
    9. Manríquez, Francisco & Sauma, Enzo & Aguado, José & de la Torre, Sebastián & Contreras, Javier, 2020. "The impact of electric vehicle charging schemes in power system expansion planning," Applied Energy, Elsevier, vol. 262(C).
    10. Chao, Hung-po & Wilson, Robert, 2020. "Coordination of electricity transmission and generation investments," Energy Economics, Elsevier, vol. 86(C).
    11. David Pozo & Enzo Sauma & Javier Contreras, 2017. "Basic theoretical foundations and insights on bilevel models and their applications to power systems," Annals of Operations Research, Springer, vol. 254(1), pages 303-334, July.
    12. Fernández, Mauricio & Muñoz, Francisco D. & Moreno, Rodrigo, 2020. "Analysis of imperfect competition in natural gas supply contracts for electric power generation: A closed-loop approach," Energy Economics, Elsevier, vol. 87(C).
    13. Guo, Hongye & Chen, Qixin & Shahidehpour, Mohammad & Xia, Qing & Kang, Chongqing, 2022. "Bidding behaviors of GENCOs under bounded rationality with renewable energy," Energy, Elsevier, vol. 250(C).
    14. Ribó-Pérez, David & Van der Weijde, Adriaan H. & Álvarez-Bel, Carlos, 2019. "Effects of self-generation in imperfectly competitive electricity markets: The case of Spain," Energy Policy, Elsevier, vol. 133(C).
    15. Savelli, Iacopo & De Paola, Antonio & Li, Furong, 2020. "Ex-ante dynamic network tariffs for transmission cost recovery," Applied Energy, Elsevier, vol. 258(C).

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