An equilibrium approach for modeling centralized and distributed generation expansion planning

This paper proposes an equilibrium approach for modeling the centralized and distributed generation (CG and DG respectively) expansion planning, by representing the operation and investments decisions of both the traditional markets agents (GENCOs) and the incoming DG customers. More specifically, GENCOs maximize their profits, while DG customers minimize their net energy expenses, in the sense of Nash, considering the energy and reserve commodities, and the network access tariffs of DG customers. CG units must meet both the grid demand (power demand minus DG production) and the reserve requirements, considering fuel, emissions, start-up and shut-down costs, and ramp constraints. A weekly-simplified hydro unit management is also considered. To simplify the resolution, the final equilibrium model is transformed into an equivalent cost-minimization problem from its Karush-Kuhn Tucker conditions.
Several case examples show, for example, that for low DG investment costs or high access tariffs, CG peaker technologies investments decrease, CG base ones remain constant, while DG investments increase. Extreme scenarios of low DG investment costs and high tariffs, although unlikely, show also how load-defection and grid-defection situations may occur.