Research On The Capacity Investment Strategies Under The Conditions Of Both Demand And Policy Uncertainties

Electric power industry is an important national foundation industry, whose development and building are closely related to the healthy and rapid development of the national economy and social order, which we can see through the snow disaster in southern China at the starting of 2008. Due to the power industry market-oriented reform, China's power industry has made rapid and great development, but have failed to get out of the cycle of "power surplus-to reduce the investment-shortage of electricity-to increase investment- power excess", the reason of which is that there are a lot of uncertainties, irreversibility and huge sunk costs in the power generation investment. As we all known, either surplus of power or shortage of power will bring about huge economic losses and social losses so one of many important challenges electric power industry reform is facing is how to maintain sufficient generation capacity to meet current and future load requirements, which is strengthened and led to widespread concern by the failure of California electricity market reform in America. Therefore, it is very important for us to discuss and study power generation capacity investment strategy of power generation and the stability of the electric power system here.This paper establishes the models of bidding Cournot game and dynamic bidding of power generation by taking into account rational dynamics and adaptive dynamics (including the optimal reaction dynamics, then analyzes its stability domain and simulate its bifurcation diagram and chaos; goes on analyzing generation capacity investment strategy under uncertain market demand by introducing market demand variables which is assumed to follow a random distribution; establishes the models of dynamic electricity generation equilibrium and capacity generation investment on the basis of bidding equilibrium, analyzes generation capacity investment strategy under the linear demand; analyzes generation capacity investment strategy under uncertainties of both market demand and policy by introducing policy variables which is assumed to follow a normal distribution on the basis of the analysis in the previous chapter.On the above analysis, this paper come to this conclusions: 1) when the speed of pricing strategy adjustment is smaller than a certain value, is to maintain in the Nash equilibrium, while when the speed is faster than the value, then the dynamic pricing system gradually goes into the fold bifurcation and chaotic state.2) under linear demand conditions, a single power generation business in the electricity market will not invest to improve power supply because of its monopolistic position, while oligopolistic competition is in favor of investment in power generation, which increases the total electricity supply of the community.3) investment in power generation business will increase with the market demand increase.4) investment in power generation business will decrease as the market risk factors and policy variables increase, yet will increases as market demand increase.