A scalable solution framework for stochastic transmission and generation planning problems

Current commercial software tools for transmission and generation investment planning have limited stochastic modeling capabilities. Because of this limitation, electric power utilities generally rely on scenario planning heuristics to identify potentially robust and cost e↵ective investment plans for a broad range of system, economic, and policy conditions. Several research studies have shown that stochastic models perform significantly better than deterministic or heuristic approaches, in terms of overall costs. However, there is a lack of practical solution approaches to solve such models. In this paper we propose a scalable decomposition algorithm to solve stochastic transmission and generation planning problems, respectively considering discrete and continuous decision variables for transmission and generation investments. Given stochasticity restricted to loads and wind, solar, and hydro power output, we develop a simple scenario reduction framework based on a clustering algorithm, to yield a more tractable model. The resulting stochastic optimization model is decomposed on a scenario basis and solved using a variant of the Progressive Hedging (PH) algorithm. We perform numerical experiments using a 240-bus network representation of the Western Electricity Coordinating Council in the US. Although convergence of PH to an optimal solution is not guaranteed for mixed-integer linear optimization models, we find that it is possible to obtain solutions with acceptable optimality gaps for practical applications. Our numerical simulations are performed both on a commodity workstation and on Francisco D. Munoz Sandia National Laboratories, Analytics Department, P.O. Box 5800, MS 1326 Albuquerque, NM 87185-1326, USA Tel.: +1-505-284 3787 E-mail: [email protected] Jean-Paul Watson Sandia National Laboratories, Analytics Department, P.O. Box 5800, MS 1326 Albuquerque, NM 87185-1318, USA E-mail: [email protected] 2 Francisco D. Munoz, Jean-Paul Watson a high-performance cluster. The results indicate that large-scale problems can be solved to a high degree of accuracy in at most two hours of wall clock time.