Generation expansion and retirement planning based on the stochastic programming

• We develop a mathematical optimization model for concurrent generation expansion and retirement planning (GERP) problem in electric power systems.
• Energy-limited units, which are usually fossil-fueled unit with specific fuel contracts and hydro units with restricted water resources, are accommodated in the proposed methodology.
• The system reliability is considered in both forms of a problem constraint and an objective function term through employing the system value of lost load (VOLL).
• The developed mathematical model lies within mixed-integer programming (MIP) format which could be effectively tackled via high-performance commercial solvers.
• Comprehensive numerical studies are conducted to clearly demonstrate the effectiveness of the proposed model and impacts of different parameters on the problem solution.

This paper develops a mathematical model based on the stochastic programming for simultaneous generation expansion and retirement planning. Retirement decision of the existing generating units is accommodated since these units are aging more and more. The proposed method is formulated as an optimization problem in which the objective function is to minimize the expected total cost consisting of the investment required for commissioning new units, operation and maintenance costs, the retirement salvage cost, and the system risk cost. The problem is subjected to a set of generating unit and system physical and operational constraints. The modeling of energy limited units is also devised in a probabilistic manner as an underlying requirement in practical studies. The Monte Carlo simulation approach is used to consider the component random outages. A large number of scenarios are simulated and the scenario reduction technique is applied to tailor the computational effort within a tractable range, which is essential for large-scale problems. Numerical studies are conducted on the IEEE-RTS79 and the performance of the proposed model is investigated. As expected, the retirement option could be beneficial particularly when the contribution of aged units in the system unreliability becomes more severe.