A price guideline for generation expansion planning in competitive electricity markets

Generation expansion planning (GEP) in competitive markets is a decentralized decision making process. A set of conflicting decisions by independent generators that each of them tries to maximize its profit shapes this complex process. Because of these conflicts the whole process must be managed and conducted by regulatory body to prevent instability in the long-term electricity market. This paper proposes a method for long-term price forecasting for the generation market by using the spot market pricing theory and develops a new price duration curve as a guideline for decision making of generators. The curve can be introduced and updated by regulatory body in adequate time periods.