Analysing the impact of diverse factors on electricity generation cost: Insights from Sri Lanka

Abstract

The primary responsibility of a power system utility is to provide continuous, high-quality electricity at a fair and competitive price. To maintain low generation costs while utilising diverse energy sources, optimisation methodologies are crucial. Water value and generation costs exhibit significant variability on seasonal, daily and timely basis and reflect dynamic interactions between electricity demand and power plant availability. Currently, power system planners often overlook these seasonal and time-of day dependent variations in water value and generation costs. This research paper addresses this gap by analysing how fluctuations in electricity demand and power plant availability affect generation costs in the Sri Lankan power system. It introduces a novel economic dispatch model and presents three methods for estimating water value to calculate seasonal and time-of-day electricity costs. The discussion highlights how these findings can utilise policymaking, particularly in the context of electricity pricing debates and water management for agriculture versus electricity generation, as well as in calculating the water value for each reservoir.