Electric Utility Capacity Expansion Planning with Uncertain Load Forecasts

Abstract This paper is concerned with the role and impact of uncertainty in the forecast of electricity demand. In particular, the emphasis is upon how uncertainty about future demand affects current choices and strategies of capacity expansion. The uncertainty in demand is incorporated into both a stochastic linear program with recourse and an ordinary linear program. In the latter case only the “expected value” of demand is considered. The main result of this paper is that under fairly general conditions an ordinary linear program provides the same optimal solution as the more complex stochastic linear program.