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Generation expansion planning (GEP) – A long-term approach using system dynamics and genetic algorithms (GAs)

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  • Pereira, Adelino J.C.
  • Saraiva, João Tomé

Abstract

This paper presents a model to solve the Generation Expansion Planning (GEP), problem in competitive electricity markets. The developed approach recognizes the presence of several generation agents aiming at maximizing their profits and that the planning environment is influenced by uncertainties affecting the demand, fuel prices, investment and maintenance costs and the electricity price. Several of these variables have interrelations between them turning it important to develop an approach that adequately captures the long-run behavior of electricity markets. In the developed approach we used System Dynamics to capture this behavior and to characterize the evolution of electricity prices and of the demand. Using this information, generation agents can then prepare their individual expansion plans. The resulting individual optimization problems have a mixed integer nature, justifying the use of Genetic Algorithms (GAs). Once individual plans are obtained, they are input once again on the System Dynamics model to update the evolution of the price, of the demand and of the capacity factors. This defines a feedback mechanism between the individual expansion planning problems and the long-term System Dynamics model. This approach can be used by a generation agent to build a robust expansion plan in the sense it can simulate different reactions of the other competitors and also by regulatory or state agencies to investigate the impact of regulatory decisions on the evolution of the generation system. Finally, the paper includes a Case Study to illustrate the use and the results of this approach.

Suggested Citation

  • Pereira, Adelino J.C. & Saraiva, João Tomé, 2011. "Generation expansion planning (GEP) – A long-term approach using system dynamics and genetic algorithms (GAs)," Energy, Elsevier, vol. 36(8), pages 5180-5199.
    • Handle: RePEc:eee:energy:v:36:y:2011:i:8:p:5180-5199
    DOI: 10.1016/j.energy.2011.06.021
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    References listed on IDEAS

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    1. Robert H. Patrick & Frank A. Wolak, 2001. "Estimating the Customer-Level Demand for Electricity Under Real-Time Market Prices," NBER Working Papers 8213, National Bureau of Economic Research, Inc.
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    3. Antunes, C.Henggeler & Martins, A.Gomes & Brito, Isabel Sofia, 2004. "A multiple objective mixed integer linear programming model for power generation expansion planning," Energy, Elsevier, vol. 29(4), pages 613-627.
    4. Olsina, Fernando & Garces, Francisco & Haubrich, H.-J., 2006. "Modeling long-term dynamics of electricity markets," Energy Policy, Elsevier, vol. 34(12), pages 1411-1433, August.
    5. Dyner, Isaac & Larsen, Erik R., 2001. "From planning to strategy in the electricity industry," Energy Policy, Elsevier, vol. 29(13), pages 1145-1154, November.
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