Probabilistic Modelling of Demand Diversity and its Relationship with Electricity Market Outcomes

Part of the planning process in a multi-regional, interconnected electricity market involves electricity market simulation to look for indications of the need for new generation investment. Regional demand forecasts are required on a dispatch-interval basis for the simulation period, and as interregional demand diversity can affect market outcomes, appropriate levels of diversity should be chosen and uncertainty of diversity considered. This paper presents a methodology for probabilistic simulation of demand diversity scenarios, and an analysis of the market benefits associated with demand diversity. In addition, the implications this has for new generation investment indicators is examined.