14th IEEE PowerTech Conference - PowerTech 2021, Madrid (Spain) Online. 27 June - 02 July 2021
Summary:
Investment costs are significantly decreasing along the years for some electricity generation technologies (such as wind or solar), making them an attractive option for generation capacity expansion. Nevertheless, most of the available capacity expansion models, either minimizing cost or maximizing profit, annualize investment costs exogenously (usually distributing them uniformly along the plant life span) or consider overall investment costs, but without an adequate representation of residual value. Both approaches are misleading if investment cost decrease along the years. This paper introduces a cost minimization model for ca-pacity expansion planning that considers overall investment costs, with a coherent representation of the residual value. This method-ology distributes endogenously the cost recovery along the years, in an optimal way. The presented case study results indicate that uniform annualization may misestimate optimal investment and it is not the most adequate option in this context. This approach opens the possibility of a deeper analysis of the optimal recovery cost path, improving planning of any electrical assets in minimiza-tion-cost planning models or market-equilibrium-based ones.
Spanish layman's summary:
Este artículo presenta un modelo matemático que ayuda a entender mejor cómo se recuperan las inversiones en nuevas centrales de generación eléctrica a lo largo de los años de su vida útil para decidir cuáles son las tecnologías más adecuadas según sus costes y cuando de debe hacer estas inversiones.
English layman's summary:
This work introduces a mathematical model that helps to better understand how the investment in new electricity generation power plants are recovered along their life span in order to decide which technologies are the most adequate depending on its costs, and when these investments should be made.
Keywords: costing, generation power planning
DOI: 
https://doi.org/10.1109/PowerTech46648.2021.9494779
Published in 2021 IEEE Madrid PowerTech, pp: 1-6, ISBN: 978-1-6654-1173-8
Publication date: 2021-06-27.
Citation:
E. Centeno, S. Wogrin, Annualized versus overall investment cost in generation capacity expansion planning, 14th IEEE PowerTech Conference - PowerTech 2021, Madrid (Spain) Online. 27 June - 02 July 2021. In: 2021 IEEE Madrid PowerTech: Conference proceedings, ISBN: 978-1-6654-1173-8
