Long-term uncertainties in generation expansion planning: Implications for electricity market modelling and policy

Ian J. Scott, Pedro M.S. Carvalho, Audun Botterud and Carlos A. Silva

Energy, 2021, vol. 227, issue C

Abstract: Investment decision making in the energy sector is a complex process due to the inherent long-term uncertainty. This work investigates the importance of representing a wide range of economic and physical sources of uncertainty in the modelling of the electricity market, both for investment decision making and descriptive market modelling. The results demonstrate that the difference between a deterministic and stochastic solution increases non-linearly when uncertainties across multiple inputs are combined and is 109% higher than when uncertainties across individual inputs are superimposed. Further, combining uncertainty sources by adding a limited number of scenarios to multiple sources of uncertainty outperforms adding additional scenarios to any individual source of uncertainty. Additionally, for the purpose of market modelling, the generation mix found by the stochastic optimisation solution differs significantly from the average solution found by looking at scenarios individually, emphasising the importance of the approach chosen to represent uncertainty. Finally, modelling scenarios individually underestimates the range of price outcomes and overestimates the range of potential carbon dioxide emission outcomes, given uncertainty.

Keywords: Uncertainty; Generation expansion planning; Stochastic optimisation; Electricity market modelling; Energy policy; Scenario analysis (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0360544221006204
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:227:y:2021:i:c:s0360544221006204

DOI: 10.1016/j.energy.2021.120371

Access Statistics for this article

Energy is currently edited by Henrik Lund and Mark J. Kaiser

More articles in Energy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().