Evaluation of the variance of production cost using a stochastic outage capacity state model

A stochastic outage capacity state model is presented for evaluating the random error in power system production cost which is estimated via the Baleriaux-Booth approach. The proposed model is thought to be the first model capable of evaluating the variance of production cost of a system of realistic size. The proposed model is used to evaluate the normalized standard random error of production cost for the IEEE Reliability Test System with an 168-hour simulation horizon. The result is about 13%. An extension approximation is suggested for estimating the normalized standard random error of production cost for a long simulation horizon (e.g. one year) from the results obtained from a short-term (e.g. a day, a week) simulation. Using this result the annual normalized standard random error is about 2.7%