Investment in Electricity Generation and Transmission

Decision Making under Uncertainty

verfasst von: Antonio J. Conejo, Luis Baringo Morales, S. Jalal Kazempour, Afzal S. Siddiqui

Verlag: Springer International Publishing

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

This book provides an in-depth analysis of investment problems pertaining to electric energy infrastructure, including both generation and transmission facilities. The analysis encompasses decision-making tools for expansion planning, reinforcement, and the selection and timing of investment options.
In this regard, the book provides an up-to-date description of analytical tools to address challenging investment questions such as:How can we expand and/or reinforce our aging electricity transmission infrastructure?
How can we expand the transmission network of a given region to integrate significant amounts of renewable generation?
How can we expand generation facilities to achieve a low-carbon electricity production system?
How can we expand the generation system while ensuring appropriate levels of flexibility to accommodate both demand-related and production-related uncertainties?
How can we choose among alternative production facilities?
What is the right time to invest in a given production or transmission facility?Written in a tutorial style and modular format, the book includes a wealth of illustrative examples to facilitate comprehension. It is intended for advanced undergraduate and graduate students in the fields of electric energy systems, operations research, management science, and economics. Practitioners in the electric energy sector will also benefit from the concepts and techniques presented here.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Investment in Generation and Transmission Facilities

Abstract

This introductory chapter provides an overview of the investment decision-making process in electric energy systems, and it spans both transmission and generation investment. Transmission investment is regulated because it critically influences the operation of the system as a whole, while generation investment is generally the concern of private entities.

Antonio J. Conejo, Luis Baringo, S. Jalal Kazempour, Afzal S. Siddiqui

Chapter 2. Transmission Expansion Planning

Abstract

A critical issue in the operation of electric energy systems is the capacity of the transmission lines that enable energy flows from generation nodes to demand nodes. In this chapter, we analyze the transmission expansion planning (TEP) problem, which allows a transmission planner to identify the optimal transmission reinforcements to be carried out with the aim of facilitating energy exchange among producers and consumers, e.g., by reducing generation or load-shedding costs. With this purpose, two models are described and analyzed: first, a deterministic model that solves the TEP problem based on a future demand forecast, and second, an adaptive robust optimization (ARO) model that takes into account the influence of different sources of uncertainty, such as future demand growth and the availability of generating units in the TEP problem. These two models are formulated using a static approach in which transmission expansion plans are made at a single point in time and for a future planning horizon.

Antonio J. Conejo, Luis Baringo, S. Jalal Kazempour, Afzal S. Siddiqui

Chapter 3. Generation Expansion Planning

Abstract

This chapter describes the generation expansion planning (GEP) problem in a given electric energy system. Here, we take the perspective of a central planner that determines the generation expansion plan that is most beneficial for the operation of the electric energy system as a whole. The central planner does not actually build the generating units; however, it encourages private investors to build the electricity production facilities, e.g., by using different types of incentives. Considering such a central view, we provide and describe different models for the GEP problem: from a very basic model based on a deterministic, static, and single-node approach to more complex models that consider the impact of investment timing, transmission constraints, and uncertainty on the GEP problem.

Antonio J. Conejo, Luis Baringo, S. Jalal Kazempour, Afzal S. Siddiqui

Chapter 4. Generation and Transmission Expansion Planning

Abstract

The two previous chapters describe and analyze the transmission expansion planning problem (TEP, Chap. 2) and the generation expansion planning problem (GEP, Chap. 3). These two problems are critical for the optimal expansion planning of electric energy systems. However, these chapters analyze the GEP and TEP problems independently. In this chapter, we describe the joint generation and transmission expansion planning (G&TEP) problem in a given electric energy system. The G&TEP problem is analyzed from the perspective of a central planner that determines the generation and transmission expansion plan that is most beneficial for the system as a whole. To do so, we provide and analyze different models that progressively incorporate additional details within the G&TEP problem with a special emphasis on the modeling of the risk associated with expansion plans.

Antonio J. Conejo, Luis Baringo, S. Jalal Kazempour, Afzal S. Siddiqui

Chapter 5. Investment in Production Capacity

Abstract

The two previous chapters describe and analyze the generation expansion planning (GEP) problem as well as the joint generation and transmission expansion planning (G&TEP) problem, both from the perspective of a central planner that determines the expansion plan that is most beneficial for the system as a whole. Unlike the problems in those two chapters, referred to as centralized expansion problems, this chapter addresses a market-oriented generation investment problem, in which a single power producer competing in an electricity pool seeks to maximize its own profit through making the best generation investment decisions. It is important to note that a market-oriented decision-making problem is generally more complex than a centralized one, since the former is subject to additional uncertainty related to the behavior of other producers (rivals). In this chapter, we provide and analyze different investment models that progressively incorporate additional details with emphasis on solution techniques.

Antonio J. Conejo, Luis Baringo, S. Jalal Kazempour, Afzal S. Siddiqui

Chapter 6. Investment Equilibria

Abstract

Investment equilibrium analysis constitutes a useful framework for regulators to gain insights into the behavior of strategic producers and the evolution of generation investment in an electricity market. Such a perspective enables regulators to design better market rules, which in turn may contribute to increasing the competitiveness of the market and to stimulating investment in generation capacity. This chapter provides a methodology based on optimization and complementarity modeling for identifying generation investment equilibria in a network-constrained electricity market.

Antonio J. Conejo, Luis Baringo, S. Jalal Kazempour, Afzal S. Siddiqui

Chapter 7. Deciding on Alternative Investments: A Real Options Approach

Abstract

Investment decisions in power plants and other assets are typically made under evolving uncertainties. Power companies often have managerial discretion over the timing of the investment as well as flexibility regarding the type of technology. By abstracting from some real-world details, the real options approach provides an elegant mathematical framework in which to assess the value of such flexibilities to provide both managerial and policy insights. In this chapter, we introduce the real options approach and contrast it with the now-or-never net present value perspective. Besides dealing with the issue of optimal timing, the real options approach also enables a power company to value operational flexibility, e.g., in the form of faster ramping, as compound options. Other flexibilities, such as modularized investment and endogenous capacity choice, are also amenable to analysis via this approach. Finally, the impact of risk aversion is explored, and the chapter concludes with extensions and exercises for further analysis.

Antonio J. Conejo, Luis Baringo, S. Jalal Kazempour, Afzal S. Siddiqui

Backmatter

Titel: Investment in Electricity Generation and Transmission
verfasst von: Antonio J. Conejo
Luis Baringo Morales
S. Jalal Kazempour
Afzal S. Siddiqui
Verlag: Springer International Publishing
Electronic ISBN: 978-3-319-29501-5
Print ISBN: 978-3-319-29499-5
DOI: https://doi.org/10.1007/978-3-319-29501-5