Evaluation of Generation Capacity Adequacy using System

405 Pages·2013·27.31 MB·English

Evaluation of Generation Capacity
Adequacy using System Dynamics

Thahirah Syed Jalal

A thesis submitted for the degree of
Doctor of Philosophy
in
Electrical and Electronic Engineering

University of Canterbury
Christchurch, New Zealand
March 2013
Dedicated to my wonderful children and beloved husband.
Dedicated also to University of Canterbury and the beautiful garden city of
Christchurch, New Zealand.

ABSTRACT
Most power market structures have been developed and implemented without
being tested, causing major problems such as shortages and blackouts. The
main cause for these problems is the inability of some markets to provide
adequate stimulus for new generation investments. The installed generation
capacity goes through boom and bust cycles, exposing consumers to potential
shortages during long bust periods.
With the realisation that the power market has a strong interaction with
generation investment, a System Dynamics (SD) model is developed to study
how the market interacts with generation expansion. The SD model also
allows for market structures and policies to be evaluated before being
implemented. It can be an important tool in ensuring that generation expansion
is done optimally without the expense of energy security.
New Zealand’s generation capacity is no exception to the boom and bust trend.
Since the commencement of the New Zealand Energy Market (NZEM) in
October 1996, energy shortages occurred in the winters of 2001, 2003 and
2008. As a case study, an SD model is developed to study the NZEM. The
results show that under some forecasted scenarios, New Zealand is susceptible
to future energy shortages due to boom and bust cycles in the generation
capacity.
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ACKNOWLEDGMENTS
First and foremost, special big thanks to Professor Pat Bodger who has been
relentlessly supportive throughout the ups and downs of my PhD. His
encouragement and advice have been invaluable in not only making this PhD
possible but enjoyable at the same time.
Thanks to my family for their patience and support during my study. Thanks
also to my friends in the Electrical Power Engineering Centre (EPECentre)
who were such a great company and made the study more pleasant. Thank you
to my friends and colleagues who have supported and helped me in various
ways throughout my stay in New Zealand.
Thank you also to:-
 Unison Networks Ltd for supporting me and my study
 employees of University of Canterbury who have helped out in the
various aspects of the study
 Electricity Commission and Ministry of Economic Development, New
Zealand for making the data available for the study and answering
further queries
 Professor Andrew Ford for providing some insights on starting the
System Dynamics model
 Dr Tim Densem for his encouraging words and support on the thesis
examination draft
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 Kindercare Puriri Street, Lollipops Ahuriri, Montessori Taradale,
PORSE and Laura for providing a safe, homely and educational
environment for my children while I study and work
 Wonderful New Zealanders and brave people of Christchurch for the
warmth and support during the earthquakes
 The Government of New Zealand for additional financial supports
throughout the student years.
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LIST OF PUBLICATIONS

The following papers and posters have been presented and published, throughout the course
of this research work:
Posters
Date Title Conference
2.9.2009 The Application of System Dynamics University of Canterbury Postgraduate
in Power Generation Planning (I) Showcase 2009, Christchurch, New
Zealand
19-20 The Application of System Dynamics New Zealand Postgraduate (NZPG)
November in Power Generation Planning (II) Conference 2009, Wellington, New
2009 Zealand

Conference papers
Date Title Conference
19-20 The Development of Electricity Universiti Tenaga Nasional (UNITEN)
August Supply Industry in Malaysia Graduate Student Conference on Research
2008 and Development 2008, Putrajaya, Malaysia
7-8 National Energy Policies and the International Conference of Energy and
December Electricity Sector in Malaysia Environment 2009, Malacca, Malaysia
2009
17-19 June The Development of a System Electricity Engineer’s Association (EEA)
2010 Dynamics Model for Electricity Conference 2010, Christchurch, New
Generation Expansion in New Zealand
Zealand
19 August The Application of System APEX 10 Southern Summit, Christchurch,
2010 Dynamics in Electricity Planning New Zealand
5-8 The Development of a System 20th Australasian Universities Power
December Dynamics Model to Evaluate Engineering Conference (AUPEC 2010),
2010 Electricity Generation Expansion in Christchurch, New Zealand
New Zealand
20-23 Evaluating the Impacts of 2011 IEEE1 PES2 Power Systems
March 2011 Generation Capacity Cycles in New Conference & Exhibition (PSCE 2011),
Zealand Phoenix, Arizona, United States of America
(U.S.A)
19-23 June Evaluation of the New Zealand 2011 IEEE PES PowerTech, Trondheim,
2011 Electricity Generation Expansion in Norway
Meeting Dry Year Demands
23-24 June, The impacts of generation mix on 2011, Electricity Engineers Association
2011 New Zealand’s susceptibility to dry Conference, Auckland, New Zealand
year shortages

1 Institute of Electrical and Electronics Engineers
2 Power and Energy Society
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NOMENCLATURES
Abbreviations Details
APR Annual Planning Report
BETTA British Electricity Trading and Transmission Arrangements
BETTA British Electricity Trading and Transmission Arrangements
CalISO California ISO
CPUC California Public Utilities Commission
CM Capacity margin
CEGB Central Electricity Generation Board
CCGT Combined cycle gas turbine
COMIT Commodity Information and Trading
CPI Consumer Price Index
DistCos Distribution companies
ERCOT Electric Reliability Council of Texas
ESP Electric Service Providers
EPPAM Electric Utility Policy and Planning Model
EC Electricity Commission
ECNZ Electricity Corporation of New Zealand
M-Co Electricity Market Company
ESI Electricity supply industry
ETS Emission Trading Scheme
ECM Energy capacity margin
ENTSO-E European Network of Transmission System Operators
ETSO European Transmission Operators
FIR Fast Instantaneous Reserve
FERC Federal Energy Regulatory Commission
GAMS General Algebraic Modeling System
GEM Generation Expansion Model
GXP Grid Exit Point
GIP Grid Injection Point
HVDC High Voltage Direct Current
IPP Independent Power Producer
ISO Independent system operators
ICP Installation Control Points
IGCC Integrated gasification combined cycle
IEM Internal Electricity Market
IAEA International Atomic Energy Association
ISO-NE ISO New England
JASP Jiaotong Automatic System Planning Package
LMP Location Marginal Pricing
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LRMC Long range marginal cost
MDS Market development scenario
MARIA Metering and Reconciliation Information Agreement
MISO Midwest ISO
MIP Mixed integer program
NEM National Electricity Market
NEMMCO National Electricity Market Management Company
NZEECS National Energy Efficiency and Conservation Strategy
NEMS National Energy Modelling Systems
NGC National Grid Company
NETA New Electricity Trading Arrangements
NETA New Electricity Trading Arrangements
NYISO New York ISO
NZEM New Zealand electricity market
NZES New Zealand Energy Strategy
NI North Island
OASIS Open Access Same-Time Information System
OCGT Open cycle gas turbine
O&M Operation and Maintenance
PJM Pennsylvania-New Jersey-Maryland
PPP Pool Purchase Price
PPA Power Purchase Agreement
PIES Project Independence Evaluation System
RTO Regional Transmission Organisations
RMA Resource Management Act
SPD Scheduling, Pricing and Dispatch
SRMC Short run marginal cost
SIR Slow Instantaneous Reserve
SI South Island
SPP Southwest Power Pool
SOE State Owned Enterprise
SOO2008 Statement of Opportunities 2008
SOO2010 Statement of Opportunities 2010
SCI Statements of Corporate Intent
SD System Dynamics
TSO Transmission system operators
U.K. United Kingdom
U.S United States
WIGPLAN Westinghouse Interactive Generation Planning
WASP Wien Automatic System Planning Package

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Table of Contents

1 Introduction 1

1.1 General background 1

1.3 Thesis Objective and Layout 6

2 Restructuring of the Electricity Supply Industry 10

2.1 Regulated ESI 10

2.1.1 Description and motivations 11

2.1.2 Perceived Deficiencies of the Regulated ESI 13

2.2 Factors for ESI restructuring 15

2.3 Descriptions of ESI restructuring 17

2.4 General ESI structures and their evolution 19

2.4.1 Single purchaser model 19

2.4.2 Wholesale competition model structure 21

2.4.2.1 Power pool 22

2.4.2.2 Multi-Market mechanism 23

2.4.2.3 Pools versus exchanges 24

2.4.3 Retail competition model structure 25

2.5 Comparisons between the ESI structures 26

2.6 Reform process 27

2.7 Hybrid Markets 28

2.8 Global restructuring trends 29

2.8.1 Great Britain 30

2.8.2 Nordic countries 30

2.8.3 Continental Europe 31

2.8.4 Australia 32

2.8.5 United States of America 32

2.9 Problems with restructured markets 33

2.1 Chapter summary 35

3 Power Generation Expansion Planning Methods 36

3.1 Fundamentals of generation expansion planning 36

3.2 Plant technology and its impacts on planning 39

3.3 Power system planning under a regulated ESI 41

3.3.1 Power system planning methods 42

3.3.2 Generation expansion planning methods 43

3.4 Generation planning after ESI restructuring 45

3.5 Market interaction with generation investment 47

3.5.1 Scenario 1: Capacity not sufficient to meet demand 51

3.5.2 Scenario 2: Wrong mix of generation capacity 52

3.5.3 Scenario 3: Wrong level and mix of generation capacity 53

3.6 Impacts of restructuring on generation investment 55