DYNAMIC ANALYSIS OF NATURAL GAS ROLE ON CAPACITY EXPANSION IN POWER MARKET

Ali Movahednasab, Masoud Rashidinejad, and Amir Abdollahi

Keywords

System dynamics, natural gas, capacity expansion, power market

Abstract

By increasing the extraction of natural gas, as a relatively clean source of energy, its role in the power systems is being expanded. In this regard, natural gas-based technologies and consuming the fuel by demand are two tie points between these systems. System dynamics is a conceptual tool for long-run analysis of dynamic systems, which is based on control theories. This paper employs system dynamics for long-run analysis of the natural gas effect on capacity expansion in the power market. The idea is studied in generation and consumption levels and three scenarios, including (1) stable state, (2) variation of natural gas price and (3) access of demand to natural gas and electricity, are considered. Four generation technologies, namely coal-fired, combined cycle gas turbine, gas turbine and wind, compete in a pay-as-bid energy market using published data by energy information administration. The first scenario is profitable for the whole technologies and provides the reliability. High-charge gas increases the profit and decreases the share of gas-based technologies in the market. Low-charge gas increases the share of gas-based technologies and causes the loss of the firms. Demand access to both energy resources affects the profit and reliability destructively.

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