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

Authors: Berna Tektas Sivrikaya; Ferhan Cebi

Addresses: Management Faculty Macka, Istanbul Technical University, 34367, Istanbul, Turkey ' Management Faculty Macka, Istanbul Technical University, 34367, Istanbul, Turkey

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.

DOI: 10.1504/IJIDS.2016.075789

International Journal of Information and Decision Sciences, 2016 Vol.8 No.1, pp.24 - 52

Received: 09 Jul 2014
Accepted: 10 Oct 2014
Published online: 05 Apr 2016 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article