Modeling Externality Costs and Intermittent Technologies in Generation Expansion Planning Models

The objective of the generation expansion master plan is to determine the necessary capacity and types of power plants for accommodating future load growth. The current software utilized for guiding generation planning primarily relies on the load duration curve (LDC) paradigm, which overlooks the chronological order of events. Additionally, the optimization process does not consider the environmental costs associated with power plants, as these costs are calculated separately once the optimal plan is finalized. This research study focuses on incorporating wind power plant modeling into generation planning models based on the LDC approach. Furthermore, the article emphasizes the integration of environmental costs into the optimization process, enabling researchers and policymakers to make more informed decisions regarding the growth of electricity and energy resources. The paper employs the widely used and reputable Wien Automatic System Planning (WASP) Package, version WASP-IV planning tool to identify the most optimal capacity expansion plans for Oman’s Main Interconnected Network (MIS) as a specific case study. In this tool, the load is represented using the LDC approach, while the built-in optimization feature does not account for environmental costs. To overcome this limitation, environmental costs are added to fuel costs so that they become part of the optimization function. The results show that when the opportunity cost of gas and environmental costs are considered in the optimization process, a significant number of wind generators are selected. To guarantee that non-dispatchable renewable technologies are fairly considered by decision-makers, the study suggests including opportunity costs as input data in generation planning models. © The Author(s), under exclusive licence to Springer Nature Switzerland AG 2024.