Computation of strict long-run marginal cost for different HV consumers

In this paper the strict long-run marginal cost (LRMC) for the ratemaking of High Voltage (HV) consumers is computed, along with the constituent parts of LRMC, namely the marginal capacity cost and the marginal operating cost. The computation is performed using the perturbation approach, employing a generation expansion planning model in order to compute the optimal generation capacity expansion program that could cover the future increased demand. The perturbation is performed using realistic data from five HV consumers in Greece, which are used as demand increments for the overall system demand. The attained LRMCs are compared and conclusions are drawn regarding the effect of the consumption profile on the LRMC. A sensitivity analysis is performed considering an increasing demand increment for each HV consumer, in order to evaluate the effect of the increment magnitude on the LRMCs. Moreover, the Marginal Capacity Cost and the Marginal Operating Cost are computed in all cases. All tests are performed using the Greek electricity market, and the planning period for the LRMC computation is 20 years.