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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 NegnevitskyDeregulation 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 ConferencePagination
279-285ISBN
978-1-63439-401-7Department/School
School of EngineeringPublisher
Curran Associates, Inc.Place of publication
New York, USAEvent title
The 18th Power Systems Computation ConferenceEvent Venue
Wroclaw, PolandDate of Event (Start Date)
2014-08-18Date of Event (End Date)
2014-08-22Rights statement
Copyright unknownRepository Status
- Restricted