Comparison between centralized planning model and market oriented planning model for the generation expansion plan

Before deregulation, th Korea Electric Power Corporation (KEPCO) had been a vertically integrated monopoly over power generation, transmission, and distribution. However, the generation competition market based on Cost based pool (CBP) began in April, 2001. The KEPCO generation department has been allocated into six independent GenCos. Before the reform of the power industry that took place in South Korea, the government had planned the electric power supply by adjusting the balance of supply and demand in the long run, and KEPCO made the decision to invest electric power equipments at the lowest cost under some constraints. However, after the deregulation, a new concept of planning the electric power supply was introduced to stabilize the supply generation. The government develops the basic plan for the long-term electricity supply and demand (BPE) and announces the BPE on a biennial basis. The BPE stipulates the electricity policy directions on supply and demand, the long-term outlook, construction plans, DSM, etc. The time horizon of the plan is 15 years. The plan for plant construction is evaluated based on the simulation result of a computer model - the Wien Automatic System Planning Program (WASP). The WASP is suitable for a monopoly structure pursuing total cost minimization. There are strong requirements for the introduction and use of analysis models for the generation mix suitable for new generation environments. We have adopted an agent based model - the Electricity Market Complex Adaptive System (EMCAS) - and was applied to the Korean electricity market base on the 3rd BEP. Our simulation results show the availability of a market based model just for the changed electricity market environment.