Benefits of chronological optimization in capacity planning for electricity markets

The applications of optimization techniques in planning exercises with the aid of decision-support tools has benefited from improvements in computing performance over the years. Multi-processing and distributed high performance computing systems, developed in recent times, is waiting to be harnessed by modelling tools and techniques. Long-term Capacity Expansion Planning is constrained by computing performance; hence the load duration curve (LDC) approach is commonly adopted for such long-term models. In this paper chronology is retained in deterministic modelling of long-term investment decisions along with an accurate production cost model co-optimization that accounts for inter-temporal constraints of thermal plants. The South Australian system has been modelled in the PLEXOS^® simulation software. Results reveal that investment decisions from the LDC optimization favours high penetration of renewable intermittent generation incurring significant future operational cost; this outcome is shown to be handled by the use of chronological optimization techniques, which provide superior solutions.