An improved mechanism for capacity payment based on system dynamics modeling for investment planning in competitive electricity environment
Many countries have experienced restructuring in their electric utilities. This restructuring has presented the power industries with new challenges, the most important of which is long-term investment planning under uncertain conditions. This paper presents an improved mechanism for capacity paymen...
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| Veröffentlicht in: | Energy policy 2008-10, Vol.36 (10), p.3703-3713 |
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| creator | Assili, Mohsen Javidi D.B., M. Hossein Ghazi, Reza |
| description | Many countries have experienced restructuring in their electric utilities. This restructuring has presented the power industries with new challenges, the most important of which is long-term investment planning under uncertain conditions. This paper presents an improved mechanism for capacity payment. The mechanism has been investigated based on system dynamic modeling. In our proposed mechanism, generators will recover a part of their investment through capacity payment. While the payment for any plant remains constant during the operation period, it depends on the investment needed to build it. The main factors affecting long-term planning have been considered in our model. The approach can be used to investigate the effects of fixed as well as variable capacity payment in market investment. We used the probability density function of load as a new concept to calculate average market price. Delays in unit constructions, estimation of demand, and market capacity growth during construction periods have been included in the proposed algorithm as parameters, which affect the regulator's decision for changing capacity payment. The model can be used by regulators to investigate strategies that may affect the fluctuations in the market. |
| doi_str_mv | 10.1016/j.enpol.2008.06.034 |
| format | Article |
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Hossein ; Ghazi, Reza</creator><creatorcontrib>Assili, Mohsen ; Javidi D.B., M. Hossein ; Ghazi, Reza</creatorcontrib><description>Many countries have experienced restructuring in their electric utilities. This restructuring has presented the power industries with new challenges, the most important of which is long-term investment planning under uncertain conditions. This paper presents an improved mechanism for capacity payment. The mechanism has been investigated based on system dynamic modeling. In our proposed mechanism, generators will recover a part of their investment through capacity payment. While the payment for any plant remains constant during the operation period, it depends on the investment needed to build it. The main factors affecting long-term planning have been considered in our model. The approach can be used to investigate the effects of fixed as well as variable capacity payment in market investment. We used the probability density function of load as a new concept to calculate average market price. Delays in unit constructions, estimation of demand, and market capacity growth during construction periods have been included in the proposed algorithm as parameters, which affect the regulator's decision for changing capacity payment. 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Hossein</creatorcontrib><creatorcontrib>Ghazi, Reza</creatorcontrib><title>An improved mechanism for capacity payment based on system dynamics modeling for investment planning in competitive electricity environment</title><title>Energy policy</title><description>Many countries have experienced restructuring in their electric utilities. This restructuring has presented the power industries with new challenges, the most important of which is long-term investment planning under uncertain conditions. This paper presents an improved mechanism for capacity payment. The mechanism has been investigated based on system dynamic modeling. In our proposed mechanism, generators will recover a part of their investment through capacity payment. While the payment for any plant remains constant during the operation period, it depends on the investment needed to build it. The main factors affecting long-term planning have been considered in our model. The approach can be used to investigate the effects of fixed as well as variable capacity payment in market investment. We used the probability density function of load as a new concept to calculate average market price. Delays in unit constructions, estimation of demand, and market capacity growth during construction periods have been included in the proposed algorithm as parameters, which affect the regulator's decision for changing capacity payment. The model can be used by regulators to investigate strategies that may affect the fluctuations in the market.</description><subject>Applied sciences</subject><subject>Capacity</subject><subject>Competition</subject><subject>Dynamics</subject><subject>Economic data</subject><subject>Electric energy</subject><subject>Electric utilities</subject><subject>Electricity</subject><subject>Energy</subject><subject>Energy economics</subject><subject>Energy market</subject><subject>Energy policy</subject><subject>Exact sciences and technology</subject><subject>General, economic and professional studies</subject><subject>Generation investment</subject><subject>Investment</subject><subject>Methodology. 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Hossein</au><au>Ghazi, Reza</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>An improved mechanism for capacity payment based on system dynamics modeling for investment planning in competitive electricity environment</atitle><jtitle>Energy policy</jtitle><date>2008-10-01</date><risdate>2008</risdate><volume>36</volume><issue>10</issue><spage>3703</spage><epage>3713</epage><pages>3703-3713</pages><issn>0301-4215</issn><eissn>1873-6777</eissn><coden>ENPYAC</coden><abstract>Many countries have experienced restructuring in their electric utilities. This restructuring has presented the power industries with new challenges, the most important of which is long-term investment planning under uncertain conditions. This paper presents an improved mechanism for capacity payment. The mechanism has been investigated based on system dynamic modeling. In our proposed mechanism, generators will recover a part of their investment through capacity payment. 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| subjects | Applied sciences Capacity Competition Dynamics Economic data Electric energy Electric utilities Electricity Energy Energy economics Energy market Energy policy Exact sciences and technology General, economic and professional studies Generation investment Investment Methodology. Modelling Payments Power market Studies System dynamics System dynamics Power market Generation investment |
| title | An improved mechanism for capacity payment based on system dynamics modeling for investment planning in competitive electricity environment |
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