Competitive bidding prices for new generation capacity in Malaysia considering uncertainty

This paper proposes a model to find minimum bid price for a generating company to bid in electricity auction for new power plants in Malaysia considering uncertainty. The model has been used for three most common generation technologies i.e. 1) coal, 2) gas-fired (CCGT) and 3) nuclear. It is important for generating company to determine the minimum bid prices that it should submit in the auction to ensure that the investment would be profitable and meet the Minimum Acceptable Rate of Return (MARR) aimed by the company. The uncertainty such as fuel cost, overnight cost, operation and maintenance (O&M) cost and utilization factor are the important factors that considered in the model. The effects of these uncertainties on the bid prices of the different technologies are studied using 1) sensitivity analysis and 2) probabilistic analysis. Results show that the bid prices of nuclear is more sensitive to the changes in investment cost, O&M cost and utilization factor and less sensitive to the fuel cost than coal and CCGT. On the other hand the bid price of CCGT is more sensitive to the fuel cost. The sensitivity of coal plant shows result somewhere in between the nuclear and CCGT.