A model for long-term electricity expansion planning with endogenous environmental costs

This paper describes a methodology to incorporate the environmental costs associated to the construction and operation of power plants in the long-term expansion planning process of hydrothermal generation systems. These external costs are estimated in terms of monetary values, according to the nature of their impacts and endogenously included in the formulation of the expansion planning model. The minimization of the maximum regret framework used in the modeling process enables the development of a single expansion strategy that allows for corrections in the expansion trajectory, according to the behavior of electricity demand. A case study based on the Brazilian system and previous environmental valuation studies is presented and discussed. The results found contemplate a reduction in the total cost of the electricity system expansion planning.

► An improved model for power expansion planning in Brazil. ► Monetary valuation of electricity generation externalities. ► External costs considered ex ante diminish total costs incurred ex post.