A Market-Based Generation Expansion Planning in
Deregulated Environment Based on Distributed
Generations Development
A. H. Parsaeifard M. Manbachi
Power Electrical Engineering Power Electrical Engineering
Department Department
Azad University Azad University
Tehran, Iran Tehran, Iran
amir.parsaeefard@gmail.com moeinmanbachi@gmail.com
Abstract- This paper proposes a new comprehensive solution for
Generation Expansion Planning in deregulated environment
based on developing distributed generations and environmental
considerations. In this method, Generation Companies
(GENCOs) will make their decisions based on their
technical/economical expenses through a dynamic game in a
competitive market until the end of planning horizon. In this
game, the GENCOs manage their amount of investment by
applying the Internal Rate of Return index. In this solution, the
independent system operator (ISO) presents incentives for
distributed generation companies in a new progressive method
for supporting renewable resources besides developing
distributed generation implementations. Also, the ISO presents a
long-term incentive contracts for wind generation companies due
to its wind generation development policy. Existence of effective
incentives/penalties by the ISO such as penalty for delay in
construction and delivery of power plant, penalty for emissions
and also incentive treatment for installing high-technology
solutions for emissions reduction, leads to gain the best applicable
strategy for the generation expansion planning issue. In order to
ensure the possessing reliability of system in a satisfactory level,
the paper has used reliability indices such as ENS and EIR for
assessing the presented strategies through the Monte-Carlo
Simulation technique.
Keywords- Distributed Generations Development; Economical
Features; Emission; Game-Theory; Generation Expansion
Planning; Reliability.
I. INTRODUCTION
In power system studies and planning, Generation
Expansion Planning (GEP) concept is defined as: Determining
the type and the optimal time for operation of new generation
plants to supply the forecasted demand of system besides
keeping reliability in a desirable level in a long-term horizon.
The genesis of new commercial concepts in power
electricity industry and deploying deregulated power markets,
have led to fundamental changes in GEP issue. Nowadays,
GEP process has faced with innumerable challenges in
deregulated environments. In previous mono-poly structure,
the aim of operators summarizes as reaching to a strategy that
978-1-4244-5721-2/10/$26.00 ©2010 IEEE
677
M. B. Abaee Kopayi M. R. Haghifam
Computer and Electrical Computer and Electrical
Engineering Department Engineering Department
Tehran University Tarbiat Modares University
Tehran, Iran Tehran, Iran
m.b.abaee@gmail.com haghifam@modares.ac.ir
has the lower cost of installation besides guarantying the
availability of system. In a competitive environment,
maximization the payoffs gained from market participation is
one of the main targets of generation companies (GENCOs).
On the other hand, ISO has its own reliability and security
concerns that mostly, these two points of view aren't in the
same direction. Therefore, this issue can create many conflicts
in GEP of any system.
On the other hand, the viewpoints of power system
managers of countries have been attracted to distributed
generation (DG) resources expansion with new technologies
so that operation and investment horizon of these countries is
moving forward to developing more DGs. Among the many
new renewable energy targets set in 2008, Australia targeted
45 terawatt-hours of electricity by 2020 [1].
In Japan, projection of the electricity substitution by
renewable energy in 2050 would be 10 percent for wind
power, 18 percent for solar energy, 14 percent for biomass, 10
percent for geothermal heat and 14 percent for hydraulic
power [2]. The EU formally adopted its target to reach 20
percent share of renewable energy in final consumption by
2020, setting also country-specific targets for all member
states [3]. Diversity of distributed generation resources and
technologies is one of the vital moot points in generation
expansion planning of these resources.
Steering DG resources to a flexible framework that
inevitable uncertainties related to DG plants did not affect on
the investment rates of these resources which will rise to the
occasion through optimal generation expansion of DGs. Thus,
applied policies from power system operators and managers
need to contain sufficient incentives for installation of these
generation units. On the other hand, providing adequate
platforms of installing conventional power plants to achieve
the certain level of availability for system is one of the
concerns that should be considered by power system operator.
A circumstance of emissions control from human societies
can change the strategies of expansion of new power plants
substantially.
PMAPS 2010
 TABLE I
BRIEF LITERATURE REVIEW OF GENERATION EXPANSION PLANNING

Investment
Emission High- Conventional Type DG Type System Multiyear
Model Payback REF
Consideration Techs. Candidate Candidate Security Horizon
Index
Cournot Game No No Yes No Yes Yes No [7]
Optimization No No No Yes No No No [8]
Dynamic Game No No Yes No Yes Yes No [9]
Optimization Yes No Yes Yes No Yes No [10]
GA-benders’
Yes No Yes No Yes Yes No [12]
decomposition
Multiobjective
Yes No No Yes No Yes No [13]
optimization
noncooperative
No No Yes No Yes Yes No [14]
competition
Dynamic
Yes No Yes Yes No Yes No [15]
Programming
Dynamic Game Yes Yes Yes Yes Yes Yes-10Years Yes (IRR) This Paper

One of the applicable guidelines of this issue is setting
incentives for DG companies to intensify their activities in
power electricity markets besides regulating disincentive
provisions for conventional pollutant units to control and
reduce their emissions. In recent years, applying high-
technologies have been proposed for confronting the extension
pollutants. Heretofore, extensive researches have been
explored to determine the best strategy for GEP issue. Table I
presents an overview through researches about GEP. Many of
them solve the problem in conventional mono-poly
environment.
Most of these solutions indicate that the objective function
has been limited for minimizing the generation costs besides
considering operation constraints. During the two past
decades, the researches surrounding of GEP issue have
focused on economical motivations of GENCOs to maximize
their payoffs in power markets besides keeping reliability of
system in a desirable level.
In this category of researches, some sorts of papers have
been applied the optimization techniques with conventional or
advanced algorithms [6], [8], [10], [13]. Some papers, have
studied the behaviors of generation companies in power
electricity markets by using game-theory [7], [9], [15].
Reference [7], has modeled the issue with the characteristics
of non-cooperative game in deregulated power market.
Considering different technologies of conventional power
plants and estimating reliability indices such as LOLP and
EUE are the main features of this paper. Despite these
valuable considerations, this paper hadn't offered any DG
development or emission reduction policy. In [9], generation
expansion solution has been performed by maximizing the
payoff of GENCOs through a dynamic game. For the
availability assessment of power system, this paper considered
the reliability as a constraint of solution. Not using distributed
resources, not considering the amount of investment of
GENCOs and not providing motivational-competitive
framework for market players are some of disadvantages of
this paper.
In [10], GEP has explored through a multi-objective linear
programming relying on costs minimization, emission control
considering DG units besides conventional plants, but this
method hadn't given any emphasis on reliability concerns of
system operator and commercial motivations of power
electricity industry. A. Zangeneh et al. in [13] have presented
the distributed generation expansion planning (DGEP) based
on multi-purpose optimization method. In this paper,
generation expansion planning distributed resources such as
Fuel Cells, Micro-Turbines, Gas-Turbines and Gas Engines
have been studied but this paper had not noticed the
motivation-based market with reliability and operation
concerns.
As it is observed, the generation expansion planning of
distributed generations with motivation-based policy in
competitive environments hadn’t been considered thoroughly.
In [15], the market has been modeled by both distributed
generation and conventional resources. This paper has reached
to the GEP solution only in the investor point of view and it
hadn't attended to the power system management of the
mentioned problem.
The new method that has been proposed in this paper,
leads to accomplish the distributed generation expansion
solution in a ten year horizon based on a dynamic game
through regulating a supportive policy for distributed
generations development, considering ISO reliability concerns
and providing incentive-based emission control policy.
In fact, this paper offers a new market-oriented solution for
generation expansion of power generation units by applying
conventional generation units such as steam plant for base
load, hydro for mid-load and conventional gas power plants
for supplying peak load besides considering distributed
generation expansion planning (DGEP) by applying DG
resources such as: wind, combined heat and power (CHP) and
micro-turbine (M.T) plants.
In order to develop wind power plants in comparison with
other distributed resources, this paper presents long-term
incentive contracts for wind generation investors through its
policy. Therefore, the paper has also offered a DGEP market-
oriented area for distributed generation companies. Figure 1
shows the schema of presented model in this paper.

678
 Figure 1. The schema of relations between different influent organizations in Generation Expansion Planning Market.

Numerical results are gain by applying Roy Billinton test

system (RBTS) [16] for testing accuracy and applicability of ⎧ f ( k ,t ) = f ( i , k , t -1) -
⎪ T I
the new presented solution. In this case study, two GENCOs ⎪
T I

compete with each other in a GEP market for installing ∑

⎪ t i ∑ α ( i , k ,t ) × ϑ ( i ) + ∑ ∑ α ( i , k ,t ) × f ( i , t ) -
t i (1)
conventional plants and four DGENCOs compete in a DGEP ⎪ T I
⎨ ⎧ 1000 ⎫
market for developing DG units in a 10 year horizon. The ⎪ ∑ ∑ ⎨ F C ( i , k ,t ) × 8760 + V C ( i , k ,t ) ⎬ -
annual load growth has been considered about 10 percent with ⎪ t i ⎩ ⎭
5 percent uncertainty that simulated through a five piece ⎪ T I
normal distribution curve. For reliability assessment of power ⎪ ∑ ∑ α ( i , k ,t ) × P r ob( i , k ,t ) × λ ( i )
⎩ t i
system in considered horizon, this paper has applied Monte- Where,
Carlo simulation for appraising reliability indices such as
Energy Not Supplied (ENS) and Energy Index Reliability f(k,t) : The capital of investor-k in year-t.
(EIR). Therefore, this paper is able to beget an eligible f(i,k,t-1) : The investment of GENCO-k on installing
interaction between generation companies and ISO for GEP unit of-i in year-t.
and DGEP issues. α(i,k,t) : The investment factors of units (0,1).
ϑ(i) : The investment cost of unit-i.
II. THE GENERATION EXPANSION SOLUTION
FC & VC : The fix and variable maintenance costs of
One of the goals of generation expansion planning in
GENCO-k on unit-i in year-t.
deregulated environments is providing a well-competitive
space for private section to expand the generation units of Prob(i,k,t) : The probability of late delivery of GENCO-k on
system prosperously besides keeping safety of the network [5]. constructing unit-i in year-t.
So, this paper determines the objective function of each λ(i) : The penalty for late delivery of constructing
GENCO by (1). generation unit-i.
Notifying the determined objective function, the effective A generation company participates in GEP market due to
elements in the amount of invest and the profit of Generation its Investments. One of the main essential parameters in cost
Company have been considered thoroughly. This function and benefit analysis of a GENCO is the Internal Rates of
consists of many sub-functions such as: the profit of selling Return of investment that shows in (2) and (3). IRR is being
electricity in energy market, the initial finance of company in calculated from Net Present Value (NPV) that is the present
the current year, variable and fix operation and maintenance worth of the total profit of an investment. In this paper,
costs and also disincentive factors for late delivery of GENCOs predicts their annual rates of return. Considering
generation unit. their IRR, the Capital investment, fixed and variable

679
maintenance & operation costs and by forecasting the amount constraint supplies the minimum acceptable reliability of
of selling electricity on the future markets, each GENCO system (7).
decides to maximize its payoffs through the horizon times of
GEP issue. R min < R .M (t ) < R Max (7)
N
Ft Where,
(2)
NPV = ∑ =0 Rmin : Minimum reserve of system.
( )
t
t = 0 1 + d* RMax : Maximum reserve of system.
R.M(t) : Reserve Margins of GEP strategies, in time stages-t.
Where,
Therefore, the generation companies select their strategies
Ft :Profit or net cash flow in year t. in GEP market based on a dynamic game to find the best
dt :Market discount rate in year t. strategy. After finding the Nash equilibrium, they offer this
N :Time periods
strategy to ISO. Independent system operator checks the
Hence, reliability of system by applying MCS technique with 150000
IRR = d* (3) iterations to calculate the ENS and EIR indices. EIR shows the
Let’s assume that: reliability level of a power system. (8) and (9) show the EIR
The existence of economical and operational constraints and ENS equations respectively [1]:
leads to reduce the options of feasible strategies that may
EIR = 1 − ENS p.u (8)
change the decision of market participants. Therefore, in this
paper, GENCOs desire to maximize their own payoffs through That,
n
a dynamic game considering the behaviors of other EP
competitors. The best strategy will be gained by applying ENS p.u = ∑ k k (9)
k =1 E
backward induction method. So, if the equilibrium point exits
Where,
in the market, the market could be converged to Nash
equilibrium. At this point, the participants will not feel Ek Pk : Energy Curtailed × Probability of energy lost.
unsatisfied from their decision in market. On the other hand, E : Total energy under the load duration curve.
the constraints of presented solution are divided into
If the reliability of system supplies in each year of
economical and operational parts. The economical and
generation expansion planning horizon, then the ISO will
operational constraints are:
check emission level of system in the selected strategy. If the
A. Investment constraint: emission value is higher than the considered level, an
The company should have enough investment in the incentive policy will be implemented for generation
current year to have sufficient power for its decision makings. companies. GENCOs re-new their Nash strategy and notify it
to ISO by getting incentives. This process continues until the
f (i ,k ,t ) > 0 (4) emission considerations of system have been respected.
Therefore, if the offered strategy didn’t accord with ISO
B. Limitation of Installation constraint: policy, motivational incentives would have been notified to
In order to prevent the consumedly installation of the GENCOs to re-present their GEP strategy to ISO. Fig. 2
generation units which leads to investment motivation indicates the flowchart of suggested solution.
reduction, this constraint has been considered by (5). On the other hand, in DGEP market the GENCOs also set
K
their strategy through (1) to maximizing their own payoffs.
∑α
k
( i , k ,t ) < ρ (i ) (5) They model the behaviors of other GENCOs by applying a
dynamic game and find the Nash strategy with backward
induction method. All the mentioned constraint in (4), (5), (6)
C. Generation constraint:
and (7) have also been considered in DGEP. Thus, ISO checks
One of the main characteristics of power electricity market the presented Nash strategy if it covers the distributed
that separates it from the other markets is the equality of generations development policy. Then ISO assesses the
generation and demand. This constraint has also considered amount of wind generation plants due to its policy, if the
the added generation capacity (6). strategy accepts in previous level. If the wind power plants
I K T D
(6) had been installed in an adequate level the final strategy has
∑∑∑ P
i k t
( i , k ,t ) ≥ ∑D
d
been gained. Otherwise, the GENCOs re-assess their strategy
until the acceptable strategy is being provided. Fig. 3
Where, represents the DGEP market policy of new offered solution.
D: Demand of system at each time stages. In conclusion, this paper presents a new market-oriented
D. Reserve Margin constraint: solution for GEP and DGEP based on maximizing the payoffs
of GENCOs by applying dynamic game theory for achieving
It is essential for ISO to have an appropriate safety margin Nash equilibrium, supplying the main concern of ISO that is
for keeping reliability of system in a desirable level. This

680
the preserving reliability of system by using Monte-Carlo III. SIMULATION RESULTS
Simulation technique in order to study ENS and EIR indices. Roy Billinton Test System (RBTS) [16] has 185MW
annual peak load with 11 generation units. Two GENCOs are
the owners of these ten generators that participate in GEP
market in a 10 year horizon. Table II, presents the basic
information of RBTS.
Table III, IV, V and VI indicate the annually peak demand
growth, the GEP data, and the DGEP data of RBTS and
investment capability of GENCOs respectively. Schematic of
RBTS is indicated in Fig. 4. All GENCOs are going to
maximize their own payoffs through maximizing their own
payoffs in a dynamic tree-game. So, the Nash equilibrium has
been gained. This strategy has been offered to ISO. Table VII
and VIII show the initial Nash strategy of GEP and DGEP.

Figure 4. Linear Diagram of RBTS.

TABLE II
Figure 2. The flowchart of new proposed solution for GEP. GENERAL INFORMATION OF ROY BILLINTON TEST SYSTEM
Unit Size No. of Schedule
Type F.O.R
(MW) Unit Maintenance(week/yr)
5 Hydro 2 0.010 2
10 Thermal 1 0.020 2
20 Hydro 4 0.015 2
20 Thermal 1 0.025 2
40 Hydro 1 0.020 2
40 Thermal 2 0.030 2

TABLE III
GEP LOAD GROWTH FOR RBTS

Horizon Max Load Min Load

Base Load 185 66.378
Year 1 203.5 73.0158
Year 2 223.85 80.31738
Year 3 246.235 88.34912
Year 4 270.8585 97.18403
Year 5 297.9444 106.9024
Year 6 327.7388 117.5927
Year 7 360.5127 129.3519
Year 8 396.5639 142.2871
Year 9 436.2203 156.5159
Year 10 479.8424 172.1674
Figure 3. The flowchart of DGEP market policy.

681
 TABLE IV Then, ISO checks reliability indices from (6) & (7)
GENERATION EXPANSION PLANNING
considering the annual value of reliability of system. The ENS
DATA FOR RBTS
of each horizon year has calculated through Monte-Carlo
Expansion Candidate Unit Gas Thermal Hydro simulation by 150000 iterations. After reliability assessment of
Cinv (×1000$/kW) 6000 12000 15000 power system, penalties have been imposed to GENCOs if
Capacity (MW) 20 30 30
Instruction Period (year) 1 2 3 they have emission issues. Table IX shows the emission data
FOR 0.015 0.02 0.02 of generating units. For considering the values of
Rate of Return (×1000$) 2800 5600 6100 incentives/disincentives after finding the Nash Equilibrium,
Maintenance Fix Cost 100 225 300
the GENCOs have calculated their payoffs through
Maintenance Var. Cost 48 192 240
considering the difference between high and conventional
TABLE V technologies. Thus, the GENCOs with the new payoff function
DISTRIBUTED GENERATION EXPANSION PLANNING will make their strategies based on installing high technology
DATA FOR RBTS units in the mentioned horizon years. Table X gives the
Expansion Candidate incentive/penalty calculations for the first offered strategy of
Wind CHP M.T GENCOs. After calculation of penalties, ISO notifies it to the
Distributed Unit
Cinv (×1000$/kW) 10000 8000 6000 GENCOs. Therefore, GENCOs re-assess their payoffs by
Capacity (MW) 1 1 1 maximizing their payoffs to find the Nash Equilibrium point
Instruction Period (year) 1 1 1
EFOR 0.040 0.030 0.050 again. Thus, the GENCOs did not accept to pay 1579342.855$
Rate of Return (×1000$) 3000 5600 4200 and 5721338.345$ respectively as disincentive for the
Maintenance Fix Cost (×1000$) 20 19.2 10 emission reduction, because they have found the new Nash
Maintenance Var. Cost (×1000$) 24 15 7.2 strategy that would give them the better payoffs than previous
strategy. Table XI indicates the new Nash strategy.
TABLE VI
INVESTMENT CAPABILITY OF GENCOs IN GEP AND DGEP Subsequently, the GENCOs have re-assessed their game if
they desire to offer another Nash point or to confirm
Company Invest in GEP Market Invest in DGEP Market motivational incentives. As a result, GENCOs have accepted
GenCo-1 70000 12000
GenCo-2 65000 13000 these incentives. So, they have convinced to use high
GenCo-3 0 15000 technologies for emission reduction. Table XII also gives the
GenCo-4 0 16000 final accepted Nash strategy of GEP solution. As a result,
Table XIII and Fig. 5 represent the payoffs and the final GEP
TABLE VII solution of the satisfied strategy. So, this strategy supplies the
1st SELECTED STRATEGY FOR GEP
economical needs of GENCOs entirely. By this new proposed
GenCo.1 GenCo.2 method, ISO supplies the reliability of system in its considered
STR Hydr horizon (10 years) besides reducing emissions of generation
Gas Thermal Hydro Gas Thermal
o
units to a worthwhile satisfactory level.
Year1 0 0 0 20 30 0
Year2 0 0 30 20 0 0
TABLE IX
Year3 0 0 30 20 0 0
EMISSION DATA OF GENERATING UNITS
Year4 0 0 0 20 0 30
Year5 20 0 0 0 0 30 DIM Gen. Type NOx SO2 CO2
Year6 0 30 0 0 0 30 Hydro 0 0 0
Year7 20 0 0 0 30 30 STD
gr/kW THR 8.333333 33.33333 6666.667
Year8 20 0 0 0 30 30 Value
Gas 12.5 50 10000
Year9 0 0 30 0 60 0 Hydro 0 0 0
Year10 0 30 0 40 0 30 Real
gr/kW THR 7.8076 21.11467 4792.4
Value
Gas 0.508 0 1.7955
TABLE VIII Penalty $ All 300 700 1000
1st SELECTED STRATEGY FOR DGEP

GenCo.1 GenCo.2 GenCo.3 GenCo.4 TABLE X

INCENTIVES/PENALTIES POLICY FOR RBTS
1st
Wind

Wind

Wind

Wind
CHP

CHP

CHP

CHP
M.T

M.T

M.T

M.T

STR ×1000 Technology STR GenCo.1 GenCo.2

Normal 1st 23983 19040
Year1 1 0 0 1 0 0 0 1 1 0 0 1 Normal Last 20983 22040
Payoff
Year2 0 0 0 0 0 0 0 1 0 0 1 1 High Tech 1st 22751 16738
Year3 0 1 0 0 0 1 0 0 0 0 1 1 High Tech Last 19986 19440
Year4 0 0 0 0 0 0 0 4 0 0 0 0 High Tech 1st -1600 -2300
Cost
Year5 1 0 0 0 0 0 0 1 0 1 1 1 High Tech Last -1100 -2600
Year6 0 0 0 1 1 0 0 3 0 0 0 0 Normal 1st -1579.34 -5721.34
Year7 0 1 0 0 0 2 0 0 0 0 3 0 Normal Last -1588.24 -5786.21
Year8 0 0 0 0 0 3 2 0 3 2 0 0 High Tech (Best
Year9 2 0 0 0 3 0 1 0 3 0 0 0 Penalty 1st -631.737 -2.28854
Case)
Year10 2 1 0 5 0 5 0 0 1 0 0 0 High Tech
Last -397.06 0
(Best Case)

682
 Hydro=30M Hydro=60M Hydro=30M Hydro=30M Hydro=30M Hydro=30M Hydro=30M Hydro=30M
W W W W W W W W
Convention
al THR=30MW THR=30MW THR=30MW THR=30MW THR=60MW THR=30MW
Generation
Gas=20MW Gas=20MW Gas=20MW Gas=20MW Gas=20MW Gas=20MW Gas=20MW Gas=40MW
Expansion

M.T=2MW M.T=2MW M.T=3MW M.T=2MW M.T=1MW M.T=6MW M.T=7MW M.T=1MW

Distributed CHP=1MW CHP=1MW CHP=1MW CHP=4MW CHP=2MW CHP=2MW CHP=4MW CHP=3MW CHP=4MW
Generation
Expansion Wind=2MW Wind=2MW Wind=1MW Wind=3MW Wind=4MW Wind=3MW Wind=2MW Wind=4MW

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Figure 5. The Schematic of Selected GEP and DGEP Solutions for Roy Billinton Test System.

TABLE XI generation companies in order to develop more wind power

FINAL NASH STRATEGY FOR GEP IN RBTS
plants to reach its policy. For this reason, ISO guarantees to
STR
GenCo.1 GenCo.2 buy the wind generations through signing a long-term
Gas Thr Hydro Gas Thr Hydro contract. After considering this contract by DGENCOs, the
Year1 0 0 0 20 30 0 internal rates of return of each wind generation company will
Year2 0 0 30 20 0 0
Year3 0 0 30 20 0 0 change to 7100000$. Table XIV presents the final Nash
Year4 0 0 0 20 0 30 strategy for DGEP in RBTS. In this strategy, both DG and
Year5 20 0 0 0 0 30 wind development policies have been gained thoroughly. As a
Year6 0 30 0 0 0 30 result, Table XV shows the final payoffs of DGEP in
Year7 20 0 0 0 30 30
Year8 20 0 0 0 30 30 mentioned strategies. As it is mentioned before, this solution
Year9 0 0 30 0 60 0 calculates the reliability of system using Monte-Carlo
Year10 0 0 30 40 30 0 simulation. Fig. 6 shows ENS calculation for 10th year of GEP
with 150000 iterations as an example. Therefore, this new
TABLE XII
INCENTIVES POLICY FOR NEW NASH solution supplies the needs of generation companies besides
STRATEGY IN RBTS covering both DG and wind generation development policies
of ISO entirely.
Diff. between
Diff. between Gas TABLE XIV
Thermal High
High Technology FINAL NASH STRATEGY FOR DGEP IN RBTS
Technology and its
and its normal type
normal type GenCo.1 GenCo.2 GenCo.3 GenCo.4
Investment Cost
200,000 500,000
($/kW) Last STR
Wind

Wind

Wind

Wind
CHP

CHP

CHP

CHP
M.T

M.T

M.T

M.T
1st STR 600,000 2300,000
Incentives
Final
(Best Case) 600,000 2600,000 Year1 0 0 2 0 1 0 1 0 0 1 0 0
STR
Year2 0 0 1 0 1 0 0 0 1 0 0 0
TABLE XIII Year3 0 0 0 0 0 2 0 1 1 0 0 0
THE FINAL PAYOFFS FOR THE GEP Year4 2 0 1 0 0 0 0 0 1 0 0 0
SOLUTION IN RBTS Year5 0 1 0 0 2 0 0 0 0 1 1 0
Year6 0 0 0 0 0 1 0 2 0 3 0 0
Imposing Year7 0 0 0 0 0 0 2 0 0 2 2 0
Strategy Nash Presenting Incentives
Penalties
(×1000) Year8 0 2 4 0 0 0 3 2 0 0 0 2
Gen.1 Gen.2 Gen.1 Gen.2 Gen.1 Gen.2 Year9 2 0 6 0 0 0 0 0 1 0 3 0
1st 23983 19040 17461 18262 22751 16738 Year10 0 1 1 0 2 0 1 1 0 3 0 0
Last 20983 22040 19395 16254 19986 19440

On the other hand, four GENCOs are participating in

DGEP market. In fact, GENCO-1 and GENCO-2 participate in
both GEP and DGEP markets. Therefore, they compete
through ISO policies that have shown in Fig. 3. The first Nash
strategy offers to ISO by the GENCOs. This strategy supplies
the DG policy development of ISO that is 10 to 15 percent
growth after passing the mentioned 10 year horizon but this
strategy didn’t supply the ISO wind power plant development
policy that is about 15 to 20 percent of whole distributed
generations. Therefore, the ISO presents a motivational
incentive that is signing long-term contracts with wind Figure 6. Monte Carlo Simulation for the 10st year of Nash Strategy.

683
 TABLXV [9] Jin-Ho Kim, Jong-Bae Park, Jong-Keun Park and Sung Kwan Joo, A
THE FINAL PAYOFFS FOR THE DGEP Market-Based Analysis on the Generation Expansion Planning
SOLUTION IN RBTS Strategies, IEEE, power tech, Nov.2005, 6pp.
[10] W. El-Khaltam, Y. Hegazy, and M. M. A. Salama, “An integrated
Long Term Nash Equilibrium distributed generation optimization model for distribution system
Strategy
Incentive Contract planning,” IEEE, Trans., Power Syst., vol. 20, no. 2, pp.1158-1165,
(×1000) Gen.1 Gen.2 Gen.3 Gen.4
For wind generation June. 2005.
1st STR without 8167 6862 566 27004 [11] Jose L. Ceciliano Meza, Mehmet Bayram Yildirim, and Abu S. M.
Masud, “A Model for the Multiperiod Multiobjective Power Generation
Last STR 7100$ 30485 56783 1265 4438
Expansion Problem,” IEEE, Trans., Power Syst., vol. 22, no. 2, MAY
2007.
IV. CONCLUSION [12] Jiraporn Sirikum, Anulark Techanitisawad, and Voratas
Kachitvichyanukul, “A New Efficient GA-Benders’ Decomposition
This paper presents a new comprehensive economical- Method: For Power Generation Expansion Planning With Emission
based solution for generation expansion of power and Controls,” IEEE, Trans., Power Syst., vol. 22, no. 3, Aug. 2007.
[13] A. Zangeneh, S. Jadid, A. R. kian, Clean technologies developments
distributed generation units in a competitive environment by based on a grant function in distributed generation planning , IEEE,
applying dynamic game for achieving Nash equilibrium of Power Symposium, NAPS, 2008, pp. 1-6.
market by backward induction method and also, supplying the [14] Vishnu Nanduri, Tapas K. Das, and Patricio Rocha, “Generation
main goal of ISO that is the preserving reliability of system by Capacity Expansion in Energy Markets Using a Two-Level Game-
Theoretic Model,” IEEE, Trans., Power Syst., vol. 24, no. 3, pp.1165-
using Monte Carlo Simulation technique in order to study 1172, Aug. 2009.
ENS and EIR indices and providing motivational policies for [15] C. Genesi, G.P. Granelli, P. Marannino, M. Montagna, S. Rossi, I.
using high technologies for emission reduction of generation Siviero, L. Desiata, G. Gentile, Impact of Renewable Energy Quotas and
units and developing distributed generations. Emission Trade on Generation Planning, IEEE, power tech, Bucharest,
June 2009, pp. 1-7.
For testing the correctness and the applicability of this [16] “Reliability test system task force of the application of probability
mentioned solution generation expansion of power units, Roy methods subcommittee” IEEE Rel. Test Syst., IEEE Trans. Power
Billinton Test System has been studied thoroughly as a case Apparat. Syst, vol. PAS-98, pp. 2047-2054, Nov/Dec. 1979.
study. In conclusion, the best efficient and comfortable
strategy for GENCOs is gained through this new proposed VI. BIOGRAPHIES
method for generation expansion planning issue. Amirhossein Parsaeifard (M’07) received his B.Sc. in electrical engineering
from Islamic Azad University, Tehran, Iran in 2005. He is currently pursuing
V. REFERENCE the M.Sc. degree in power electrical engineering at Islamic Azad University,
Tehran, Iran. His main research interests are generation expansion planning,
[1] Steering Committee of REN21, Renewable Global Status Report- 2009 maintenance scheduling and power system reliability.
Update, Renewable Energy Policy Network for the 21th Century, Paris,
France, 2009. Moein Manbachi (M’09) received his B.Sc. in power electrical engineering
[2] Japan Renewable Energy Policy Platform (JREPP) Launched Toward from Power and Water University of technology, Tehran, Iran in 2007. He has
2050 Japan for Sustainability, completed the M.Sc. degree in power electrical engineering at Islamic Azad
http://www.japanfs.org/en/pages/028554.html. University, Tehran, Iran. His main research interests are distribution systems,
[3] Steering Committee of REN21, Renewables Global Status Report: maintenance scheduling in power markets, distributed generations, generation
Energy Transformation Continues despite Economic Slowdown, expansion planning in deregulated environments and cogeneration systems.
Renewable Energy Policy Network for the twenty first Century, Press
Mohammad Bagher Abaee Kopayi received his B.Sc. in power electrical
release: http://www.ren21.net/globalstatusreport, France, 2009.
engineering from Power and Water University of technology, Tehran, Iran in
[4] R. Billinton and R. N. Allan, Reliability Evaluation of Power Systems,
2007. He is currently pursuing the M.Sc. degree in restructuring power
2nd ed., New York, Plenum Press, ISBN: 0-306-45259-6, 1996.
electrical engineering at Tehran University, Iran. His main research interests
[5] S. Stoft, Power Systems Economics: Designing Markets for Electricity,
are power markets, distributed generations, and generation expansion planning
IEEE Press/Wiley, New York. ISBN: 978-0-471-15040-4, 2002.
in deregulated environments.
[6] J. Zhu and M. Chow, “A Review of Emerging Techniques on Generation
Expansion Planning,” IEEE, Trans, Power Syst., vol. 12, pp. 1722– Mahmood-Reza Haghifam (M’95–SM’06) received the B.Sc., M.Sc., and
1728, Nov. 1997. Ph.D. degrees in electrical engineering in 1989, 1992, and 1995, respectively.
[7] A. Chuang, F. Wu, and P. Varaiya, “A game-theoretic model for He is a Professor in Power Systems at the Department of Electrical
generation expansion planning: Problem formulation and numerical Engineering, Tarbiat Modares University, Tehran, Iran. His main research
comparisons,” IEEE, Trans. Power Syst., vol. 16, no. 4, pp. 885–891, interests are electric distribution systems, power system operation, power
Nov.2001. system reliability, reactive power control, and soft computing applications in
[8] W. El-Khaltam, K. Bhattacharya, Y. Hegazy, and M. M. A. power system analysis and operation.
Salama, “Optimal investment planning for distributed generation
in a competitive electricity market,” IEEE, Trans., Power Syst.,
vol. 19, no. 3, pp. 1674-1684, Aug. 2004.

684