Life-cycle maintenance management of generating units in a competitive environment

Preventive maintenance of generation assets in a market environment is often subject to a more stringent financial scrutiny as compared to the regulated regime. Gencos have to strike a balance between maintenance costs and foregone profits in the short-term vis-a`-vis permanent performance degradation of the assets in the longer run. The present work lays an analytic foundation to assess the maintenance needs in a competitive environment. A stochastic optimization model is proposed that considers the trade-off among short and long-term objectives to determine the optimal maintenance profile for generating units over the life of the assets. The model recognizes the driver of generation and maintenance decisions in a competitive electricity markets namely, spot and contractual revenue, and the technical drivers, such as heat rate degradation, capacity de-rating, and increased risk of forced outages. It is expected that the modeling framework will prove to be a useful analytic first step toward addressing the life-cycle maintenance issues in an electricity market.