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Real options on power system planning under uncertainties and efficiency constraints

conference contribution
posted on 2023-05-23, 09:42 authored by Osthues, M, Rehtanz, C, Blanco, G, Michael NegnevitskyMichael Negnevitsky
Deregulation and large-scale renewable energy penetration have increased uncertainties in power system planning. Strategic flexibility in project planning and decision making is needed to mitigate increasing risks. This paper proposes a methodology that improves decision making by valuing the flexibility of investment strategies to cope with uncertainty. This is done by integrating maintenance and expansion planning. The flexibility of investment strategies, including reinvestment and expansion projects under uncertainties, is evaluated by a Real Option approach. The proposed methodology is tested on a 30-bus IEEE system. Monte Carlo simulations of uncertain state variables and the Least-Squares Monte Carlo approach are applied for evaluating investment options using dynamic backward programming. The analysis shows that flexible strategies gain in importance with increasing uncertainty and under efficiency constraints. In addition, the deferral of the final investment decision between alternative strategies remains a valuable option.

History

Publication title

Proceedings of the 18th Power Systems Computation Conference

Pagination

279-285

ISBN

978-1-63439-401-7

Department/School

School of Engineering

Publisher

Curran Associates, Inc.

Place of publication

New York, USA

Event title

The 18th Power Systems Computation Conference

Event Venue

Wroclaw, Poland

Date of Event (Start Date)

2014-08-18

Date of Event (End Date)

2014-08-22

Rights statement

Copyright unknown

Repository Status

  • Restricted

Socio-economic Objectives

Energy systems and analysis

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