Abstract

Renewable energy technologies still endure critical technical and financial challenges. These challenges demand for specially tailored decision support tools for planning the (renewable-based) strategical expansion of power systems. However, existing tools not always adequately integrate the tactical and operational dimensions of power systems into the evaluation process; hence, the designed investment strategies might fail to foresee how new infrastructure integrates with the existing power system and also fail to capture the volatile energy market dynamics. In this paper, this methodological gap is addressed by presenting a decision aid framework, based on mixed integer programming, for supporting long-term decision-making when planning (the expansion of existing) energy systems. The proposed framework relies on heuristically solving an optimization problem coined as the Generation, transmission and storage location and sizing of operation-aware sustainable power system design problem, which encodes two nested problems: a novel strategic renewable power system expansion problem, and a Unit Commitment problem. Using a case study from the Chilean power system, it is shown that the proposed tool ensures a more realistic and accurate economic evaluation, as it takes into account the influence of the evaluated project on the grid where it will be installed. In the considered case study, the devised framework designs a sustainable power system expansion investment strategy ensuring an investment rate of return of at least 7% and an annualized profit of more than 277 MM USD considering a 30 years evaluation horizon; furthermore, this is accomplished along with an equalization of the spot price resulting in a 13% reduction with respect to the current spot price of the system. This shows the impact of renewable sources and energy storage systems on the market operation. Furthermore, the proposed approach is used to investigate how high (public) subsidies on renewable technologies should be in order to increase the penetration of these technologies.