Generation Expansion Planning with Considering Energy Efficiency Investments

Energy efficiency plays an important role in mitigating energy security risk and emission problems. In this regard, energy efficiency is a major choice for policymakers in strategic resource planning. In this paper, energy efficiency programs are modeled as virtual power plant known as Efficiency Power Plants (EPP). Furthermore, a decision making framework is represented to model the strategy of EPP investor in generation expansion planning (GEP) problem. Using this framework, the EPP investor evaluates behavior of generation companies and determines an optimal strategy in implementing of energy efficiency programs. Dynamic programming (DP) is used to solve the optimization of generation investment problem. In order to maximize the profit of EPP investor at each stage of the GEP problem, a bi-level optimization problem will be formed in operation problem. The simulations show that applying the investor's decision in the EPP investment, the conventional capacity expansion is delayed and reduced. This, also, results in decreasing the total investment cost and the total emission during the planning period.