The impact of short-term variability and uncertainty on long-term power planning

• Published in: Annals of operations research Vol. 284; no. 1; pp. 199 - 223
• Main Authors: Bylling, Henrik C., Pineda, Salvador, Boomsma, Trine K.
• Format: Journal Article
• Language: English
• Published: New York Springer US 2020; Springer; Springer Nature B.V
• Subjects: Alternative energy sources; Business and Management; Case studies; Combinatorics; Costs; Decision making; Decisions; Denmark; Electric power systems; Energy industry; Energy resources; Energy trading; Expansion; Flexibility; Investment; Long term planning; Negligence; Operations research; Operations Research/Decision Theory; Original Research; Renewable energy sources; Renewable resources; Theory of Computation; Uncertainty; Denmark; Generation expansion; Uncertainty; Power planning problems; Variability; Investment
• ISSN: 0254-5330; 1572-9338
• DOI: 10.1007/s10479-018-3097-3

Traditionally, long-term investment planning models have been the apparent tool to analyse future developments in the energy sector. With the increasing penetration of renewable energy sources, however, the modelling of short-term operational issues becomes increasingly important in two respects: first, in relation to variability and second, with respect to uncertainty. A model that includes both may easily become intractable, while the negligence of variability and uncertainty may result in sub-optimal and/or unrealistic decision-making. This paper investigates methods for aggregating data and reducing model size to obtain tractable yet close-to-optimal investment planning decisions. The aim is to investigate whether short-term variability or uncertainty is more important and under which circumstances. In particular, we consider a generation expansion problem and compare various representations of short-term variability and uncertainty of demand and renewable supply. The main results are derived from a case study on the Danish power system. Our analysis shows that the inclusion of representative days is crucial for the feasibility and quality of long-term power planning decisions. In fact, we observe that short-term uncertainty can be ignored if a sufficient number of representative days is included.