Stochastic dynamics of the generation expansion in renewable power systems: the Paraguayan case

Abstract

This article presents a model that reproduces the long-term dynamics of the Paraguayan generation system, seeking to obtain a capacity expansion schedule under uncertainty. A centralized power dispatch model calculates the capacity addition rate of four technologies in two stages. First, the model dispatches existing technologies and quantifies the unsupplied demand. The dispatch model then assesses candidate technologies to cover the demand mismatch based on their available firm capacity. For each technology, the model calculates the total cost of covering the deficit and computes an optimal investment rate by applying an economic merit order. By considering Paraguay's Gross Domestic Product, and therefore electricity demand, as uncertain variables, this analysis offers empirical probability distribution functions (PDF) for firm capacity reserve margins and average system costs. By doing so, this model constitutes a tool to assess the uncertain long-term dynamics of generation systems from both a macroeconomic and a power system reliability point of view, according to the integration of firm capacity.