Evaluation of short recovery period investments on utility planning

摘要

Least cost planning for expanding public power systems plays an important role in achieving economic benefits while preserving technological necessities in generation expansion decisions. Many methods of least cost planning have been developed and many computer packages, some of them very sophisticated, have emerged over the years. Investments traditionally follow an integrated development program prepared by a planning agency, usually located in a power utility. The plan identifies the capacityincrements to be added over the planning horizon which, together with the optimal utilization of existing facilities, will meet the demand for power at minimum expected cost.In recent years utility planners have been attempting to attract private developers, often foreign, to participate in power investment. However, the next-best plant as identified by the least cost plan may be unsuitable or unattractive to such developersfor technological reasons, or because the capital requirement is too large or because the normal investment recovery period of such plant is too long to suit private sector investment. Investors may offer unsolicited bids for projects wholly outside theleast cost plan or may offer financial packages with capital recovery period and interest and return on equity rates quite different from the utilities own planning parameters.