Generation Capacity Expansion Planning in Deregulated Electricity ...

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Generation Capacity Expansion Planning in Deregulated Electricity ...

TABLE X PRESENT VALUE FINANCIAL BALANCE SUMMARY FOR MILP FRAMEWORK

Total revenue, M$ Total cost, M$ Total profit, M$

1793.23 1622.24 287.69

Fig. 15 shows a plot of the firm’s total revenue, total cost and salvage value, for a range of IRRs. It

is observed that when the firm’s IRR is low, the salvage value is an important parameter in its

financial balance since the revenue earnings are lower than total costs and for higher values of IRR,

the salvage value remains more or less constant. The same observation was made in Chapter-2in the

context of the planning framework for 25-years. The plot in Fig. 15 are however not smooth curves,

unlike those obtained in Chapter-2 because of the presence of binary variables associated with

discrete unit sizes.

Total Revenue/Cost/Profit/Salvage Value

2.0E+09

1.8E+09

1.6E+09

1.4E+09

1.2E+09

1.0E+09

8.0E+08

6.0E+08

4.0E+08

2.0E+08

0.0E+00

10.0%

13.0%

16.0%

19.0%

22.0%

25.0%

28.0%

31.0%

34.0%

37.0%

IRR, %

40.0%

43.0%

46.0%

49.0%

52.0%

55.0%

58.0%

Total Revenue Total Cost Total Profit Salvage Value

Fig. 15 Firm’s cost and revenue with MILP framework

35

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