Impact of LRIC pricing and demand response on generation and transmission expansion planning

Traditional expansion planning models reflect usage-based practices and do not consider the complete utilisation of existing resources. This problem arises due to non-inclusion of price-based incentives provided to the consumers who incur additional network reinforcement or expansion cost. The paper proposes a generation and transmission expansion planning framework that includes price-based incentives to define the future nodal load growth. The framework implements long-run incremental cost (LRIC)-based pricing signals for economically distributed demand to minimise consumer usage charges as well as network investment. Peak demand conditions by consumers are further minimised by the time-of-use-based demand response mechanism. The combined effects of price-based response and demand response are reflected in the future demand which serves as the basis for combined generation and transmission expansion planning. The case studies highlight the drawbacks of the conventional approaches which does not maximise the utilisation of existing grid resources while the proposed framework results in delayed investment strategies as a collective effort of the users and planner to optimise grid resources and the cost of assessing the electricity.