Application of Monte Carlo Real Option in the Construction of Distributed Power Flow Controller

Abstract

Uncertainty in electricity market puts forward high requirements for investors to make efficient and timely investment. In this paper, the generation model and load model in uncertain power market is constructed. Meanwhile, the generation and transmission investment cost model, which considering the installed capacity of distributed power flow controllers, is constructed. And a mathematical description of the benefits of the distributed power flow controller capacity is proposed. The real option method of Monte Carlo is applied to distributed power flow controller investments. Then, the investment model based on Monte Carlo is proposed, and the corresponding option value calculation process is given in detail. And the correctness and effectiveness of the proposed method are analyzed and compared by case study