Planning Electric Power Systems Under Demand Uncertainty with Different Technology Lead Times
Demand uncertainty is a key concern of electric utility planners. While the greater use of short lead time technologies provides one possible way to deal with this problem, it is not clear how they are best deployed. The approach taken in this paper is to examine a capacity mix model that explicitly accounts for differences in technology lead times. Key results that are obtained include the characterization of the optimal solution and the development of a new set of technology screening criteria. In practice, the "lead time order" (i.e., the set of available technologies ordered by ascending length of lead time) is typically the inverse of the so-called merit order (i.e., the set of available technologies ordered by ascending operating cost). We show that for this case, the optimal solution may be determined with relative ease. A numerical example demonstrates that some short lead time technologies screened out by standard planning methods may enter the optimal solution when differences in lead time are considered, while some long lead time technologies may leave. In addition, the optimal expected level of reliability may be greater.
Volume (Year): 45 (1999)
Issue (Month): 10 (October)
|Contact details of provider:|| Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA|
Web page: http://www.informs.org/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kleindorfer, Paul R & Fernando, Chitru S, 1993. "Peak-Load Pricing and Reliability under Uncertainty," Journal of Regulatory Economics, Springer, vol. 5(1), pages 5-23, March.
- Albert Madansky, 1960. "Inequalities for Stochastic Linear Programming Problems," Management Science, INFORMS, vol. 6(2), pages 197-204, January.
- H. D. Sherali & A. L. Soyster & F. H. Murphy & S. Sen, 1984. "Intertemporal Allocation of Capital Costs in Electric Utility Capacity Expansion Planning Under Uncertainty," Management Science, INFORMS, vol. 30(1), pages 1-19, January.
- George Stigler, 1939. "Production and Distribution in the Short Run," Journal of Political Economy, University of Chicago Press, vol. 47, pages 305-305.
- Elizabeth Olmsted Teisberg, 1994. "An Option Valuation Analysis of Investment Choices by a Regulated Firm," Management Science, INFORMS, vol. 40(4), pages 535-548, April.
- James E. Smith & Robert F. Nau, 1995. "Valuing Risky Projects: Option Pricing Theory and Decision Analysis," Management Science, INFORMS, vol. 41(5), pages 795-816, May.
- Hung-po Chao, 1983. "Peak Load Pricing and Capacity Planning with Demand and Supply Uncertainty," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 179-190, Spring.
- Gardner, Douglas T., 1996. "Flexibility in electric power planning: Coping with demand uncertainty," Energy, Elsevier, vol. 21(12), pages 1207-1218.
- Nissan Levin & Asher Tishler & Jacob Zahavi, 1985. "Capacity Expansion of Power Generation Systems with Uncertainty in the Prices of Primary Energy Resources," Management Science, INFORMS, vol. 31(2), pages 175-187, February.
When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:45:y:1999:i:10:p:1289-1306. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.