Long-termed investment planning model for a generation company operating in both bilateral contract and day-ahead markets

Berna Tektas Sivrikaya and Ferhan Cebi

International Journal of Information and Decision Sciences, 2016, vol. 8, issue 1, 24-52

Abstract: This paper presents a modelling framework for generation capacity expansion planning (GEP) applicable to independent investor generation companies (GenCos) in the context of a hybrid electricity wholesale market. The proposed model is novel in the sense that the operations of the GenCo in bilateral contracts market (BCM) and day-ahead market (DAM) are incorporated. Also, the environmental considerations are modelled through the incorporation of carbon tax and carbon dioxide (CO₂) cap regulations. At the end of existing generation units' useful life, refurbishment decisions are employed. In this way, conversion of old units to units with lower operation costs and/or green house gases emissions is modelled. The effect of uncertainties in electricity market prices, fuel costs, environmental regulations, budget, and the effect of the GenCos long-termed strategic behaviour in participating in BCM and DAM on the planning decisions are illustrated by sensitivity analysis.

Keywords: generation capacity expansion planning; long-term investments; investment planning; mixed-integer linear programming; MILP; hybrid electricity markets; bilateral contracts markets; day-ahead markets; carbon tax; carbon dioxide; CO2; carbon emissions cap; modelling; uncertainties; electricity prices; fuel costs; environmental regulations; budgets. (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

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