Generation Investment Decision Under Competition And Uncertainty

Investment decision in power generation under uncertainty and competition is a new realm encountered after the introduction of market mechanism in power industry. The present dissertation investigated this issue by giving priority to quantitative analysis based on the theoretical rationale of irreversible investment theory and modern industrial organization theory under uncertainty. Two corresponding approaches, stochastic dynamic game and stochastic approaching, are integratedly applied in this research. The main content of the study can be divided into five parts:Chapter 1 and 2 was to first sum up for a general and comprehensive overview of the relevant research home and abroad, and then goes on with an systematic analysis on the characteristics of investment decision in power generation under electricity market environment and uncertain factors it would be faced when compared with generation expansion planning under monopoly market structure.Chapter 3 discussed time choice of a power plant project under dual stochastic uncertainties. A real option model was developed aimed to choose optimal investment time, employing different stochastic process or variable to describe uncertainties such as electricity price and utilization ratio of new-added power plant. A formerly positive but latterly negative relationship between optimal investment time and electricity price uncertainty was observed, as well as a persistent positive correlation between optimal investment time and utilization ratio of new-added power plant.Chapter 4, the third part, mainly focused on incremental generation capacity investment under electricity demand uncertainty and oligopolistic market structure from the view of theoretical study. Boom(2002 2003)'s"investment + price"and Genc et al(2003)'s"investment + product"two-stage game model were extended to multi-technology environment. A"technology specialization effect"in technology type decision of generation capacity which was decreased by more fierce market competition was founded in this part.In the forth part, i.e., chapter 5, a stochastic dynamic game model for generation capacity investment was developed to cover the decision variable of investment time based on the"investment + product"two-stage game model. A new algorithm was also put forward when analyzing the model. It was observed that the fluctuation of demand uncertainty can affect both ratio and quantity of generation capacity while different initial capacity of each investor can only affect the former.In the last part, chapter 6, a case study from Jiangsu electricity power market was carried out which verified the above theoretic conclusions. A risk of over-investment and some other judgments about Jiangsu power supply industry was also pointed out in this part.