Private investment in power sector and deviations from least cost plan

Abstract

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.