PRIVATE INVESTMENT IN POWER SECTOR AND DEVIATIONS FROM LEAST COST PLAN K V S Madhavi Kudaligama Master of Engineering 072439 September, 2000 72439 Executive Summary This report describes and suggests trade-off methods for Generation Expansion Planning Studies carried out tor the period of 2000-2017. The project examines the effect of bringing forward a project which would otherwise be included at a latter year in the optimal plan and bringing in a project which is not within the least cost plan. In addition to that techniques for assessing the impact of such deviations were developed and the affects on prices were examined. The studies presented in this report were conducted under three-block load duration curve; the base, the peak and the mid peak. The existing hydroelectric plants were used as a single composite plant. The thermal plants considered were Coal, Combined Cycle, Gas Turbines, oil-fired steam and diesel plants running on residual oil. Existing thermal plant were represented by six composite thermal plants. It was assumed that plant additions were done in the beginning of the year and noil of the plants were retired during the planning period. The sensitivity of the recommended generating plant additions to the changes in commissioning year is presented in the report. The major recommendation is: The overall effect of bringing forward are. therefore different from case to case and involve many subtle issues that have to be carefully evaluated. Certain modifications to the least cost plan have a relatively healthy effect overall, but others may not. An expansion plan to bring forward or bring in an excluded project, on the base of an optimal least cost expansion plan, is a trade-off plan. Mathematically the new plans derived here are sub optimal plans. Since there is no such thing as a unique sub optimal plan, it is wise that as decision makers, generation planners have to. evaluate the many possible outcomes derived like above. Generally, a plan to bring forward or bring in a private project is good if conflicts among private investors are eliminated, utility investment is reduced and the total cost increases are not excessive. Private investment in power sector & deviations f r o m least cost plan Acknowledgments I ;nn lllPst gratcll.ll nnd pri\·ileged to lla\ e Dr. Pri:antha DC Wi_jetunga. Senior I l'l'tun:r. ( 111i \ LTsil) nt ;\Joratuwa as the super\ isor. I lis 1-.ind and encouraging assistance\\ ith rc~ard to tile problem formulation. constructing and comments on tht: results is greml) apprcci,lt~..·d I .un d~..·c p l ,: i ndehted to all the lecturers. col h:agues and li·icnds. too numerous to lllL'tH ion here. \\I H' h.t \ c (Of1lri huted so generous!) in \ arious stages n f this project vays been with me in C\n: ht11d k· I cleared. "-. \ ' 'i;\ 1 Kudaligama \L'(1ll'lllhl..'r .=! (){)() ... . .... C 1111h:nts ;\lllll"\l'"> I 1..,1 nr I .1hk.., I hi nl" Fi!!url.''> \l'I"Pil\ llb E 'l't: uti' l' ~ u m rna t·y I. Introduct io n ., l'll\\Cr \ector Pri\ati-;ation in dcH:Iopmg ( ountric" ...,\,me f"eatures orthe Ptmer ~ector Ill ~ri l.anl..a I.' • ~. I ~ tructure 2.2 (JrO\\ th I.~J I cchnica l Performam:e 1.~.-l Fina nc ial Perl"ormance 1.2 .5 Debt Cri'ii'i 1.2.6 Requirement !"or Ca piwl l'ri\alc '-;ector Po,,er rhl' IJ<)OiBOT I he Project :!. l n p n l Data l I 11ad Data .. ... 2.1.1 < >b<;crYations on [ ,i.,tm~ I lectnc1l~ Lkmantl ., ., 2 1.~ \o.,.,es!>ing the future Lb:tm:Jt~ Demand f '.!sting s~ stem 2.2.1 HHim (il.'IH:rat ion 2.2 .2 rh~.:rma I General ion ~.~.\ ll;.dro Energy t\vai labil il;. \crcen ing ol' General ion Opt iolh 2.1 1'1mer Candidates .1 ~. t I fhe rmal Candidates \\i llt l·ca.., i bil il ~ ~ 1 udi~.:" A' ailablc in CU~ .~. Tool-; and P l"01!_ra mmin J.! > I \tmh Parameter:. ' ., l - \unulation Package Lll\00 ' l ;\ kthod\)log~ ; -l J>rnhlem f-ormulation ~ -L I na ... l' Ca-,l' CONTENTS .... PHJ.!l' II II Ill Ill E · I I - I I - I I - I I - I - I I - ., I - ·' I I - - 'I - (, - (, :! - I - I ... - I - ... ' - ' - ..., ... "'\ -, - (l -, ., - 2 - X ~ - I l - ' l - ' ' - ' ' - ' l - l'ut;, ' 4 l~c~ult~ I I -L2 4 I • l "' (, ( .1se I < )ptimum Plan Ha-,e C'el I urbine l·orced 111 ~tagc 3 5. Cone.: hi'>IO II ~ Rdc.:·n· rH.'c~ \ \.2 \ ; \ -1 ' ' ' ' "' ~ ' (, Annexes Jl t,pular Computer Pad.agc-. for l·lectricit) Planning. \crcl'll ing of General ion Options < ompuu.:r Program 13asc Case Hase Case- Output List of Tables < n"" ....,, -,tem l.os..,es <1nd Ll1ad I aelor in the J>a ... t I e\\ ) c.tr:o- .. Pad I P IT CI'-l .. . ... lk111a11d f t) l'l.'Ca ... t l -,ed lor lhe ":>lud~ r ,,..,ting and Curnmillcd I l)dro Po\\er Plants I k lai l .... pf l:-.isting: and c,1mmincd I hcrmal Planh t ''lllPt'"'te Existing and lornmlllcd I henna! and ll)dl'tl J>latth 11:-drn Lnerg.) t\\ailabilit) i ' ' ( har:-tctcristics ol"' hennal gcncra1ing Plants Ctllhidcrcd a-, t::-.pansion Candida1es ' I c lt aractcristics of fuel used I I c •ptllna I Plan I .:: < •ulput ( o,r per each Pl:-tnt ...... • • 1 , 'rn htned C\ clc ~meed 111 ) car 2012 l -l c ' " " l ut httH.: Forced in Y car 200X ltv .. d l urbtnc l·orced 111 ) ear 20 16 h It c.:· ... ,.: I I urbine l11rced 111 ) e.tt 2012 -..um man 4- I I - I I - I l I - ._ 5 - 1 I~ P:t!!l' \I ,\ ~ ,\ ~ \ 1 - I ' .., 2 - I 2 - (l ., - () ' l) ' ' - I - I 1 - ' ! .. (l " - /'c "·, List of Figures I I t .nmtlll{ates ofClW and 1-,lectricit:- Sale!:> in the Recent Pa-;t I 2 l'lalll I actors b) Ptmer <;tation-., '\ {l'\:t lued Percentage Rate of Return in the Past 10 Years 11\ c-.tmcnt Plan 2000-2009 han~L' 111 Dail:- l1)<1d ( une urat1on ( un c., l -.ed lor th~· \tud~ pec1 lic lo-.t ol Candidate I hcnnal Plnnh Di'>ClHIIll Rate- Ill'~, •llllllan 111 graphical Form t ·r: B ( d)]> I,\: f) \ 1\\ \f) I~ \\ ~ ~ H< >< > IH)'J I I \ 'l \I\ I t II Acrronyms l'e)' ion Ek:ctricity 13oard Ciro.,., Dnmesl ic [>roduct I ralhlll ission and Distrihutinn \1r.:ga Wa tt .\'>1<111 Dc\elop11H:nt Hank \\ 11rld Bank 11u tid. 0\\11 and Operate Huild. Operate and I ran~ler l. tlad I l. ln.,urancc and I re1!.!hl lfi!!,her lleating Value l II II\' 1.1"' [)( ) I 1 )( ' I tnl.'r. lnteracti\1.: .md D1..,crete Optnnt!:>l.'r I oc~d DmalHll1 l un e I·~~ \ 1neric;1n Dn llar-, ._ 1 - ~ 1 - : 1 - ~ I- I ' ) ... l'.w