My Current Research in Simple Words:

    According to the National Energy Policy (NEP) developed in 2001 and the Annual Energy Outlook 2007, energy demand in the U.S. is slated to increase sharply over the next two decades. It is stated in the NEP that the United States will need about 393,000 MW of new generating capacity by 2020 to meet this growing demand. This amounts to the construction of 1,300 to 1,900 new power plants, averaging to about 60 to 90 plants a year, or more than one a week. With about fifteen States in the U.S. currently trading electricity in restructured markets (markets with reduced governmental control), a significant proportion of the aforementioned capacity expansion will have to take place in a market based environment. But, almost all of the research concerning capacity expansion has been conducted under the regulated market paradigm (aka, centralized market control). As a result, authorities in several countries with restructured electricity markets have attempted to control decisions on generation investments, instead of leaving it to market forces, to avoid detrimental impacts of capacity shortages on society. Our research intends to fill this vacuum by developing a comprehensive methodology to obtain multi-period multi-generator equilibrium capacity expansion strategies in restructured electricity markets.

     In this research, we will address the critical societal challenge of determining which type, where, and at what time period new generation capacities are likely to be added to a power network by the competing generators in response to expected demand growth, changes in network conditions, and market design incentives. This will be accomplished by developing a comprehensive model and a computational solution strategy considering major electric power market features including multiple competing generators, a multi-year planning horizon, transmission constraints in electric power networks, construction lead times, demand variability, emission limits, system reliability, risk of profit volatilities, and market power. Our model has a multi-tier game theoretic construct that iteratively builds multi-year multi-player equilibrium expansion strategies for the generators. This will be accomplished by solving a number of matrix games for each year of the planning horizon, where each generator determines his/her equilibrium expansion plan from a set of feasible expansion actions, each comprising a choice of generation technology and capacity.

     Until late nineties, a significant number of papers appeared in the literature examining the generation expansion planning (GEP) process in regulated market places. These papers studied GEP as an optimization (cost minimization) problem of a central planning authority. However, in a restructured market, the GEP problem must be viewed as multi-player noncooperative profit maximization problem and its solution should be derived from the equilibrium solutions of noncooperative games. Our modeling approach addresses this issue.