Long-termed investment planning model for a generation company operating in both bilateral contract and day-ahead markets

This paper presents a modelling framework for generation capacity expansion planning (GEP) applicable to independent investor generation companies (GenCos) in the context of a hybrid electricity wholesale market. The proposed model is novel in the sense that the operations of the GenCo in bilateral contracts market (BCM) and day-ahead market (DAM) are incorporated. Also, the environmental considerations are modelled through the incorporation of carbon tax and carbon dioxide (CO₂) cap regulations. At the end of existing generation units' useful life, refurbishment decisions are employed. In this way, conversion of old units to units with lower operation costs and/or green house gases emissions is modelled. The effect of uncertainties in electricity market prices, fuel costs, environmental regulations, budget, and the effect of the GenCos long-termed strategic behaviour in participating in BCM and DAM on the planning decisions are illustrated by sensitivity analysis.