A simulation tool to build generation expansion plans in competitive electricity markets

Abstract

This paper describes a long-term simulation model to help generation companies building expansion plans. Different from the past, the generation activity is now provided under competition, and investments are affected by uncertainties and by the decisions of other players. This paper describes the use of System Dynamics to model the evolution of the demand and of the electricity price along the planning horizon. These evolutions will then be used by individual agents to prepare their own expansion plans. These plans will globally have to comply with general constraints, typically present in Grid Codes, as for instance, a maximum value for an adequacy index as LOLE. This model and the corresponding solution algorithm will be illustrated using a Case Study to illustrate the use of the developed approach to build the expansion plans and to conduct sensitivity studies.