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Author |
Munoz, F.D.; van der Weijde, A.H.; Hobbs, B.F.; Watson, J.P. |
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Title |
Does risk aversion affect transmission and generation planning? A Western North America case study |
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Year |
2017 |
Publication |
Energy Economics |
Abbreviated Journal |
Energy Econ. |
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Volume |
64 |
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Pages |
213-225 |
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Keywords |
Risk aversion; Stochastic programming; Transmission and generation planning; Investment |
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Abstract |
We investigate the effects of risk aversion on optimal transmission and generation expansion planning in a competitive and complete market. To do so, we formulate a stochastic model that minimizes a weighted average of expected transmission and generation costs and their conditional value at risk (CVaR). We show that the solution of this optimization problem is equivalent to the solution of a perfectly competitive risk averse Stackelberg equilibrium, in which a risk-averse transmission planner maximizes welfare after which risk-averse generators maximize profits. This model is then applied to a 240-bus representation of the Western Electricity Coordinating Council, in which we examine the impact of risk aversion on levels and spatial patterns of generation and transmission investment. Although the impact of risk aversion remains small at an aggregate level, state-level impacts on generation and transmission investment can be significant, which emphasizes the importance of explicit consideration of risk aversion in planning models. (C) 2017 Elsevier B.V. All rights reserved. |
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Address |
[Munoz, Francisco D.] Univ Adolfo Ibanez, Fac Ingn & Ciencias, Diagonal Las Torres 2640, Santiago, Chile, Email: fdmunoz@uai.cl |
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Elsevier Science Bv |
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English |
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ISSN |
0140-9883 |
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Notes |
WOS:000404704900020 |
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Call Number |
UAI @ eduardo.moreno @ |
Serial |
746 |
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Author |
Bergen, M.; Munoz, F.D. |
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Title |
Quantifying the effects of uncertain climate and environmental policies on investments and carbon emissions: A case study of Chile |
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Year |
2018 |
Publication |
Energy Economics |
Abbreviated Journal |
Energy Econ. |
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Volume |
75 |
Issue |
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Pages |
261-273 |
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Keywords |
Uncertainty; Climate policies; Transmission and generation planning; Carbon emissions; Stochastic programming; Equilibrium |
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Abstract |
In this article we quantify the effect of uncertainty of climate and environmental policies on transmission and generation investments, as well as on CO2 emissions in Chile. We use a two-stage stochastic planning model with recourse or corrective investment options to find optimal portfolios of infrastructure both under perfect information and uncertainty. Under a series of assumptions, this model is equivalent to the equilibrium of a much more complicated bi-level market model, where a transmission planner chooses investments first and generation firms invest afterwards. We find that optimal investment strategies present important differences depending on the policy scenario. By changing our assumption of how agents will react to this uncertainty we compute bounds on the cost that this uncertainty imposes on the system, which we estimate ranges between 3.2% and 5.7% of the minimum expected system cost of $57.6B depending on whether agents will consider or not uncertainty when choosing investments. We also find that, if agents choose investments using a stochastic planning model, uncertain climate policies can result in nearly 18% more CO2 emissions than the equilibrium levels observed under perfect information. Our results highlight the importance of credible and stable long-term regulations for investors in the electric power industry if the goal is to achieve climate and environmental targets in the most cost-effective manner and to minimize the risk of asset stranding. (C) 2018 Elsevier B.V. All rights reserved. |
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Address |
[Bergen, Matias] Politecn Torino, Turin, Italy, Email: mebergen@uc.cl; |
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Corporate Author |
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Thesis |
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Publisher |
Elsevier Science Bv |
Place of Publication |
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Editor |
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Language |
English |
Summary Language |
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Original Title |
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Series Editor |
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Abbreviated Series Title |
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Series Volume |
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ISSN |
0140-9883 |
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Notes |
WOS:000449891600019 |
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Call Number |
UAI @ eduardo.moreno @ |
Serial |
930 |
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