Long-termed investment planning model for a generation company operating in both bilateral contract and day-ahead markets

This paper presents a modelling framework for generation capacity expansion planning (GEP) applicable to independent investor generation companies (GenCos) in the context of a hybrid electricity wholesale market. The proposed model is novel in the sense that the operations of the GenCo in bilateral contracts market (BCM) and day-ahead market (DAM) are incorporated. Also, the environmental considerations are modelled through the incorporation of carbon tax and carbon dioxide (CO2) cap regulations. At the end of existing generation units' useful life, refurbishment decisions are employed. In this way, conversion of old units to units with lower operation costs and/or green house gases emissions is modelled. The effect of uncertainties in electricity market prices, fuel costs, environmental regulations, budget, and the effect of the GenCos long-termed strategic behaviour in participating in BCM and DAM on the planning decisions are illustrated by sensitivity analysis.