Modelling and analysing the impact of flexible technologies on market-based generation investment planning

Abstract

In recent times, the value of flexibility potentials available at the demand side in addressing techno-economic challenges associated with the decarbonisation of power systems has attracted notable interest from governments, industry and academia. Notwithstanding these interests, its impacts on long-term power system planning has only been investigated using system cost minimisation models. Such models are inherited from the era of vertically integrated power utilities and cannot represent the profit-oriented decisions of the liberalised electricity industry. Available market-based generation investment planning models in technical literature neglect the time-coupling effects in their operational timescale and for this reason are inherently unable to integrate the operation of non-generating flexible technologies. This thesis investigates the impacts of demand flexibility on the long-term investment decisions of a self-interested generation company under different market designs. The thesis proposes a novel time-coupling, bi-level optimisation model which accounts for the energy shifting flexibility of the demand side. This model is further enhanced to also incorporate the operation of reserve markets with demand side participation, thereby presenting a jointly cleared energy and reserves market. This model is solved using rigorous mathematical techniques involving the formulation of a Mathematical Program with Equilibrium Constraint (MPEC) problem and the transformation of the MPEC problem to a Mixed Integer Linear Program (MILP) problem. Different case studies have been carried out to investigate the impact of demand flexibility participating in either only the energy market or in both the energy and reserves market. These case studies demonstrated the similarities in impact of different flexible technologies on the optimal generation investment decisions and enhancing the profit earned by the investing company. The thesis also investigates different scenarios regarding the flexibility of the demand side, market design options and strict carbon targets. The thesis findings show the dependence of the impact of demand flexibility on the optimal investment decisions of the examined generating company on: (i) the market(s) in which demand flexibility participates and (ii) the market design option considered.Open Acces