Multiperiod optimal power plant mix under demand uncertainty

This paper is concerned with the thermal-based electric utility capacity expansion planning under demand uncertainty. The demand uncertainty is typically represented as a set of likely load duration curves (LDCs) with respective probabilities. Conventional scenario approaches prepare respective capacity expansion plans-one for each load-and synthesize these somehow into a single plan. This paper presents a simple yet justifiable method which combines multiple plans into a single implementable plan guaranteeing the minimum expected total cost. A ‘horizontal’ expected load curve is the key concept in this method. The authors illustrate this using Korea’s data in a realistic multi-period optimal mix problem. It turns out that the recommended baseload capacity expansion (e.g., through construction of nuclear planes) follows closely that of the low-demand case, suggesting the need for conservative commitment to costly baseload plants in the presence of demand uncertainty.