A Study of Generation Investment Into the Australian’s National Electricity Market

Kin Onn Wong (2010). A Study of Generation Investment Into the Australian’s National Electricity Market PhD Thesis, School of Information Technol and Elec Engineering, The University of Queensland.

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Author Kin Onn Wong
Thesis Title A Study of Generation Investment Into the Australian’s National Electricity Market
School, Centre or Institute School of Information Technol and Elec Engineering
Institution The University of Queensland
Publication date 2010-09
Thesis type PhD Thesis
Supervisor Prof Tapan Saha
A.Prof Zhao Yang Dong
Total pages 171
Total colour pages 18
Total black and white pages 153
Subjects 09 Engineering
Abstract/Summary The deregulation of the electricity industry had fall short of recognising the uniqueness of electricity. As electricity produced has to be instantaneously consumed, while ensuring that the power system is secure at all time. However, short term issues such as demand variations resulting in uncertain pool prices, market inefficiencies, participants’ displaying strategic behaviours will all contributed to short term market problems. Such short term issues can aggregate into long term investment problems, effectively setting up market barriers against new generation investments or research into new technologies. This thesis sets out to address the above short and long term problems in the context of the Australia National Electricity Market (NEM) . The market operator of the Australia NEM utilises a Linear Programming (LP) optimisation engine to dispatch generators into production. Despite LP speed in convergence to an optimum solution, the boundary search technique may not offer sufficient optimum dispatch outcomes. A chapter in this thesis presents the application of Genetic algorithms in the solving of market dispatch problem similar to that performed by the market operator. This study has indicated that transmission capacities can be better utilised when dispatch problem is optimised by genetic algorithm, potentially offering interconnected regions greater ability to share reserves. A hybrid model was proposed in one of this thesis chapter to forecast pool prices based on historical price demand characteristics. The area of pool price forecasts was a well study area, with a number of well established time series and data mining models. However, this model proposed seeks to reduce computation resources while producing accurate forecasting results by creating dependency of the forecast pool prices with the variations in system demand. This model enables more efficient forecast of pool prices based on prices respond characteristic to variations in system demand. This allows users to perform greater range of sensitivity studies. In some occasions, the NEM pool prices are not driven by increases in demand or network constraints; but participants exhibiting strategic behaviour through rebidding their capacity offers at higher price bands. An agent based model was detailed in one chapter of this thesis to model such behaviour. The model consisted of several modules emulating the processes a typical market participant will perform when trading in the market. The study noticed that that when the marginal generator game the market at times of tight demand-supply condition, the pool prices would not reflect optimum market outcomes. New generation capacity is a crucial part in ensuring supply demand balance in the NEM, therefore second half of this thesis is devoted to present works performed in long term generation investment issues. In the Australia NEM the market operator can only inform market participants of new capacity opportunities within a set range of study scenarios and conditions. To expand the number of scenarios that can be study, an integrated model is proposed in this thesis. The proposed model look at new generation entry using market simulation results from a market simulator. The model begins with the market simulator stepping through the simulation horizon annually, where the simulated results are then feed into the proposed new entry evaluation module. This proposed new entry evaluation model will then select a new entry with the highest economic return to enter the market. The selected new entry must fulfil a list of criteria which includes cost recovery, resource availability, construction time and the overall system adequacy. In the case study performed, it was noticed that when the pool prices were sufficiently high to support the investment of most new entrants in the new entry list, units with the shortest construction time and lowest capital cost such as an Open Cycle Gas Turbine will be the first to enter the market. Enhancements were added later in the form of risk evaluation of prospective projects within a single scenario. This enhancement potentially enables investors to perform several studies of prospective projects. In this enhanced model, the risk represented expected revenue distributions due to outages of the new entrant. This will also allows investors with greater insight on the risk a potential new entry is likely to face when it enters the market. In summary, this thesis identify knowledge gap in the Australia NEM and hence set out to address some of these vital short and long term issues that are important to the structural health of the NEM.
Keyword electricity market deregulation
generation investment
pool prices forecasting
unit dispatch
Additional Notes 27, 36, 40, 43, 44, 48, 49, 52, 56, 65, 68, 70, 71, 72, 95, 101, 104, 106

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Created: Sun, 26 Sep 2010, 22:51:35 EST by Mr Kin Onn Wong on behalf of Library - Information Access Service