Long-term uncertainties in generation expansion planning: Implications for electricity market modelling and policy

Ian J. Scott, Pedro M. S. Carvalho, Audun Botterud, Carlos A. Silva

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)

Abstract

Investment decision making in the energy sector is a complex process due to the inherent long-term uncertainty. This work investigates the importance of representing a wide range of economic and physical sources of uncertainty in the modelling of the electricity market, both for investment decision making and descriptive market modelling. The results demonstrate that the difference between a deterministic and stochastic solution increases non-linearly when uncertainties across multiple inputs are combined and is 109% higher than when uncertainties across individual inputs are superimposed. Further, combining uncertainty sources by adding a limited number of scenarios to multiple sources of uncertainty outperforms adding additional scenarios to any individual source of uncertainty. Additionally, for the purpose of market modelling, the generation mix found by the stochastic optimisation solution differs significantly from the average solution found by looking at scenarios individually, emphasising the importance of the approach chosen to represent uncertainty. Finally, modelling scenarios individually underestimates the range of price outcomes and overestimates the range of potential carbon dioxide emission outcomes, given uncertainty.

Original languageEnglish
Article number120371
Pages (from-to)1-12
Number of pages12
JournalEnergy
Volume227
Issue numberJulho
Early online date24 Mar 2021
DOIs
Publication statusPublished - 15 Jul 2021

Keywords

  • Electricity market modelling
  • Energy policy
  • Generation expansion planning
  • Scenario analysis
  • Stochastic optimisation
  • Uncertainty

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