Capturing electricity trade in generation expansion models with a limited geographical scope: A novel method for deriving trade curves

Abstract

Generation expansion planning (GEP) models are crucial for designing future electricity systems. Due to computational limitations, these models often focus on a single country, thus neglecting the benefits of cross-border electricity trade. This paper presents a novel methodology for efficiently incorporating cross-border trade potentials into GEP models to address this issue. The method consists of an elaborate pre-processing step that accurately computes trade potentials so that these can subsequently be added to an investment model with a limited geographic scope. The approach is benchmarked against various alternative approaches that endogenously optimize the foreign dispatch, and the results indicate that our approach accurately determines system costs while inducing only slight deviations in the capacity mix. Although our approach requires significant pre-processing computations and an implementation effort, it is computationally highly efficient. Once the trade curves have been constructed, they can readily be added to any nationally focused GEP model with only minor modifications and very little computational effort. Modelers could consider this approach for national energy system analyses, particularly if their problem is computationally demanding or if their tool does not easily allow for geographic expansion.