| Author | Shrestha, Rabin |
| Call Number | AIT Diss. no. ET-99-3 |
| Subject(s) | Electric utilities--Costs
|
| Note | A dissertation submitted in partial fulfillment of the requirements for the degree of
Doctor of Engineering, School of Environment, Resources and Development |
| Publisher | Asian Institute of Technology |
| Abstract | This study analyses the effect of electricity purchase from independent power producers
(IPPs) by a utility on the retail price of electricity, social welfare, environmental emission
and generation system reliability. The study also establishes the optimal decision rules for
utility generation and/or purchase from IPPs. The analytical framework of the study is based
on a partial equilibrium analysis. Numerical simulations were also conducted. A case study
of Thailand is used to demonstrate the effect of different planning parameters and the
characteristics of IPP's plant on the estimated avoided cost, generation system reliability and
emission of C02, S02 and NOx using long term electricity generation expansion planning
analysis within the framework of the total cost minimization.
The study shows that a profit maximizing utility under rate of return (ROR) regulation would
not purchase electricity from an IPP when: (i) when the buyback rate for electricity purchase
from IPP is based on the avoided cost of the utility or (ii) the marginal cost of the utility is
less than or equal to the marginal cost of the IPP. The profit maximizing retail price of·
electricity for a ROR regulated utility with electricity purchase from IPPs would be lower
than that without the purchase when the marginal cost of the utility, marginal capital cost and
the price elasticity of electricity demand are constant. Fmthermore, the study shows that,
when the marginal cost of the utility that is subject to breakeven constraint is constant, the
social welfare maximizing retail price of electricity would not change with the utility's
purchase of electricity from the IPPs at the avoided cost of the utility. Numerical simulations
show that these results would also hold in the case of an increasing marginal cost. When
marginal costs of the utility and IPPs are equal, electricity purchase from IPPs would reduce
the social welfare in the case of a linear demand function. Numerical simulations in the case
of increasing marginal cost also show a decrease in social welfare with IPP paiticipation in
power generation. This shows that electricity purchase from IPPs by a regulated utility may
not be socially efficient.
Sensitivity analyses of the avoided cost (AC) in the case of Thailand show that AC would: (i)
increase with the forced outage rate of IPP plants; (ii) decrease with the level of power
purchase from IPPs; and (iii) increase with the utility's load growth. Electricity purchase
from a non-dispatchable IPP plant based on coal fired generation would increase the net
emission compared to that without the purchase from IPPs in the case of Thailand.
Furthermore, with non-dispatchable IPP plant, emission of air-pollutants would increase with .
the level of electricity purchase. The study also suggests that there is no clear answer to the
effect of electricity purchase from IPPs on overall generation system reliability in the case of
Thailand. The study shows that the value of loss of load probability (LOLP) increases while
the value of expected energy not served (EENS) decreases with electricity purchase from
non-dispatchable IPPs compared to dipatchable IPPs. The study also shows that the value of
LOLP would decrease and the value of EENS would increase when IPPs employ smaller
units to supply a given amount of electricity. |
| Year | 1999 |
| Type | Dissertation |
| School | School of Environment, Resources, and Development (SERD) |
| Department | Department of Energy and Climate Change (Former title: Department of Energy, Environment, and Climate Change (DEECC)) |
| Academic Program/FoS | Energy Technology (ET) |
| Chairperson(s) | Shrestha, Ram M.; |
| Examination Committee(s) | Amin, A. T. M. Nurul ;Pacudan, Romeo B. ;Stevenson, Rodney |
| Scholarship Donor(s) | The Austrian Government; |
| Degree | Thesis (Ph.D.) - Asian Institute of Technology, 1999 |