This dissertation seeks to foster the transition of Jamaica’s electricity system along a more sustainable path by internalising the externalities of electricity in the generation expansion planning process, among other things. This involves incorporating the damage costs of power plants’ emissions into their traditional levelised costs of electricity (LCOE), in addition to the external costs from other life cycle phases. Additionally, the dissertation involves determining the capacity contribution of wind generation in Jamaica’s electricity system, taking into consideration the stochastic nature of the resource. The dissertation also entails investigating whether current generation expansion planning parameter(s) employed in Jamaica, specifically the generation system reliability criterion, reflects socio-economic optimum.
The results of probabilistic simulations performed of Jamaica’s electricity system under various scenarios using the Wein Automatic System Planning software (WASP) are presented and served as the means of establishing the dissertation’s objectives. The results obtained were generally consistent with intuition and show that internalising the externalities of electricity into the expansion planning process improves the economic attractiveness of renewable energy technologies (RET), which have more benign externalities compared to their fossil fuel based counterparts.
The capacity contribution of wind generation in Jamaica was established to be 4.86 MW (or 23.48% of the installed capacity of 20.7 MW), which translates to potential additional revenues of US$410,560 per annum for the windfarm. This finding will enhance the financial attractiveness of future wind generation investments in Jamaica, since windfarms should now be able to receive payments for their capacity contributions; it was initially perceived in Jamaica that wind generation provides zero capacity contribution.
Simulation results also revealed that the generation reliability criterion of a loss of probability (LOLP) of 2 days/year that has traditionally been employed in expansion planning in Jamaica is not optimum. The socio-economic optimum generation reliability criterion for Jamaica’s electricity system was determined to be a LOLP of 4.38 days/year. This result implies that Jamaica’s electricity system is presently being planned at a marginal cost which exceeds the marginal socio-economic benefits to the society. As this is not economically efficient, it is proposed that the reliability criterion be modified to the later figure, since economic efficiency is also crucial to achieving sustainability.