Integrated resource planning using segmentation method based dynamic programming

The state-of-the-art restructuring of industries is changing the fundamental nature of retail electricity business; and, as a result, the so-called integrated resource planning (IRP) strategies are also undergoing modifications. Such modifications evolve from the relevant processes intended to minimize revenue requirements and maximize electrical system reliability vis-a-vis capacity-additions (viewed as potential investments). IRP modifications also provide service-design bases meeting the customer needs towards profitability. This paper describes a procedure to determine optimal IRP to expand generation facilities of a power system over a stretched period of time. Relevant production-costing is based on the so-called segmentation method combined with an advanced dynamic programming technique which takes into account of the associated uncertainties in a cohesive and systematic manner. The primary advantage of this procedure is the ability to combine reliability constraints of the system along with the estimation(s) on cost of production, via a fast and efficient algorithm. Due to reduced extent of state-descriptions involved in the relevant dynamic programming formulation, this procedure also allows a rapid calculation of the optimal plan envisaged commensurate with the set of input data assumed; further, it allows the user to perform various risk and scenario analyses cohesively.