How technical operational details affect generation expansion in oligopolistic power markets

Abstract

The increased deployment of renewable technologies, that are often discontinuous and uncertain, is dramaticaly changing the unit commitment of the rest of the generation facilities, increasing the need for cycling. As a result, operation-related issues and their costs become more relevant for an adequate analysis of generation expansion problems.

We propose a generation expansion model including an oligopolistic market representation based on an equilibrium approach. We incorporate the system states methodology into this generation expansion model allowing us to recover some chronological information in a load duration curve framework, thereby more accurately accounting for start-up and shut-down costs without making use of an hourly representation of demand. The proposed model furthermore considers the discrete nature of capacity investment decisions. The case studies that are presented illustrate the importance of considering both operational details and a market framework when making generation expansion planning decisions. Results show that the commitment, start-up and shut-down costs represent a non-negligible part of the total system operating costs. Moreover, we find that when operational details are considered, flexible technologies are preferred by the companies in the optimal mix. We also observe that under perfect competition in comparison with oligopolistic markets, more base-load plants are built as well as more peaking plants.

Additonally, we also propose a heuristic method for solving the arising equilibrium problem, by providing an efficient starting point to the diagonalisation process. This heuristic can lead to reductions of up to 90% of the computational time.