Generation Capacity Expansion Planning in Deregulated Electricity ...

Fig. 14 shows the variation of J * with IRR for a range of IRR values. The optimal **in**vestment plan

correspond**in**g to this IRR (denoted by IRR * ) represents the Base Case solution, and is discussed **in**

detail **in** the com**in**g Sections. It can be seen from Figure that the optimal IRR * so obta**in**ed is 45.1%.

Table IX provides the firm’s optimal **in**vestment plan over the 15-year plan horizon. It can be

observed from this table that **in**vestment decisions are made **in** such a way that the firm can efficiently

utilize its available budget to maximize the total profit. It is seen that most of the **in**vestment decisions

appear either **in** the beg**in**n**in**g or at the end of a plan sub-period so as to utilize the available budget

effectively.

One noticeable difference of the optimal plan, of the base case, arrived **in** this Chapter with that **in**

Chapter-2 is the complete absence of coal-based generation addition when discrete unit sizes are

considered.

TABLE IX BASE CASE GROSS OPTIMAL INVESTMENT DECISIONS FOR MILP FRAMEWORK

Year of Installation Gas-Fired (MW) Coal-Fired (MW) Comb**in**e-Cycle (MW)

1 0 0 200

5 0 0 200

9 100 0 200

11 100 0 200

Table X summarizes the present value of the f**in**ancial balance of the firm **in** the base case solution

with discrete size of units com**in**g dur**in**g plan period, where the firm yields an IRR* of 45.1%. The

total present value of its profit over the plann**in**g horizon is 287.69 M$.

There is a noticeable **in**crease **in** IRR when discrete unit sizes are considered **in** this Chapter, as

compared to the results **in** Chapter-2. The justification for this **in**crease is the higher allowable budget

**in** the present Chapter, result**in**g **in** more **in**vestments, and large capacity unit additions because of

specified discrete unit sizes of 100 MW, 200 MW and 300 MW only.

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