Dynamics of an Economics Model for Generation Coupled to the OPA Power Transmission Model

In this paper we explore the interaction between a dynamic model of the power transmission system (OPA) and a simple economic model of power generation development. Despite the simplicity of this economic model, complex dynamics both in the economics (prices, market share etc) and in the transmission system characteristics (blackouts, reliability etc) are found. Depending on the values of the control parameters (the price enhancement factor, the critical margin and the Minimal Acceptable Rate of Return) the system can be in various states with vastly differing properties. These states are characterized by power law tails in the failure sizes in one limit and exponential tails with extremely high frequency of failures in the other limit. At least some of these control parameters can be thought of as regulatory based and could therefore be directly influenced by reliability considerations.