Generation expansion planning with revenue adequacy constraints

Generation capacity expansion models have traditionally taken the vantage point of a centralized planner seeking to find cost-optimal generation capacity to reliably meet load over decadal time scales. Often assuming perfectly competitive players, these models attempt to provide guidance for system planners without necessarily ensuring that individual generators recover all of their costs from market revenues during their lifetime. In this work, we incorporate revenue adequacy constraints in a two-stage generation expansion planning model. After making generation investment decisions in the first stage, day-ahead unit commitment (UC) and dispatch decisions are made in the second stage, along with market-clearing pricing decisions. To approximate a market equilibrium, the duality gap between the second-stage non-convex UC problem and its linearly-relaxed dual is used as a regularizer. Case studies are presented to contrast a traditional planning model with our revenue adequacy-constrained model, which find that our model leads to different planning decisions. More specifically, our model invests in more renewable generation capacity by incurring a small increase in the total costs.