Generation Planning Under Uncertainty with Variable Resources

Abstract

In this chapter we discuss generation expansion planning in systems with variable resources. The variability and uncertainty in renewable resources like wind and solar power pose new challenges from a long-term planning perspective. There is clearly a need to introduce cleaner sources of electricity generation for environmental reasons. However, at the same time, system reliability must be maintained while trying to minimize the total cost of meeting the electricity demand. We use a stochastic dynamic optimization model to analyze optimal expansion decisions considering uncertainty in wind power generation as well as future load. In a case study, we focus on the Sao Miguel Island and investigate how the uncertainty and variability in wind power and load impact optimal expansion decisions in the long run. We show that wind power is a cost-efficient expansion alternative on Sao Miguel, but that some dispatchable generation is also needed to compensate for the variability and uncertainty in wind power. We also analyze how demand response contributes to change the optimal portfolio of supply resources.