On The Determination of Optimum Reserve Generating Capacity in an Electric Utility System

For any electric utility system, a prime requirement is the ability to be able to fulfill customer demands for power with some prescribed measure of reliability. Since future customer demands can only be estimated and since generators and auxiliary equipment (boilers, turbines, etc.) are subject to forced outages (i.e., breakdowns), a utility system is required to maintain a reserve of installed generating capacity in the form of “extra” turbo-generator units. An important problem area, then, is that associated with the determination of a proper (or optimum) installed reserve generating capacity. Failure to have a sufficient reserve (sufficient, as measured by some criterion) leads to customer shortages with resulting customer dissatisfaction and loss of revenue, both direct and indirect. On the other hand, a surplus of generating capacity means additional “inventory” costs---costs associated with direct charges on idle or unnecessary capital equipment.