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ICSP 2016 Búzios, Brazil 25 June – 1 July, 2016 Investing in adaptable portfolios of generation technologies against energy policy uncertainty Giancarlo Acevedo Department of Industrial Engineering, University of Chile, Santiago, Chile Alejandro Bernales Department of Industrial Engineering, University of Chile, Santiago, Chile Rodrigo Moreno Department of Electrical Engineering and Energy Centre, University of Chile, Santiago, Chile Department of Electrical and Electronic Engineering, Imperial College London, United Kingdom [email protected] Abstract The expansion planning for electricity generation is a complex problem, in which a strategy for the future construction of generation plants is designed, constrained to economical projections (e.g. costs prediction, risk exposures, uncertainty regarding future demands of energy) and operational issues (e.g. stability of the system and security supply). However, in recent years, expansion planning for electricity generation is facing new challenges due to a generalized environmental concern. Many plants of electricity generation, such as those based on fossil-fuels, can induce serious environmental damages including global warming, pollution, acid rain, and rising sea levels. In the last 10 years, an increasing number of countries are committed to reach progressively new renewable policy targets. For instance, the Renewables 2015 Global Status Report, from REN 21, shows that 164 countries have renewable policy targets by 2015 from only 55 countries by early 2005. These renewable policy targets has been (or they will be) implemented by each country through different mechanisms such as strict quotas for renewable generation (with the possibility of removing generation permissions) and economic incentives (e.g. penalties, carbon tax and subsidies) that are aimed to induce change in the technologies for electricity production. In this context, we present a multi-stage model to design the expansion planning for electricity generation to incorporate future –although uncertain– new renewable policy targets. The model allows an expansion planning in multiple stages in which some decision can be taken today, and others postponed to the future, when the uncertainty of new potential policies are eliminated. The model is flexible enough to consider diverse ’potential’ renewable policy measures which can be implemented by different mechanisms such as penalties, carbon taxes, subsidies, amongst others. The model is solved by a Benders decomposition algorithm to tackle large dimension problems for a country level planning of electricity generation. Through various examples based on the Chilean electricity system, we show that a multi-stage planning provide important economic benefits in term of costs and risks reductions.
