The Development Of A System Dynamics Model For Electricity Generation Expansion In New Zealand

Abstract

Many countries exhibit cycles of shortfall and overbuilding (bust and boom cycles) of their installed generation capacity after they restructured their electricity industries in the late 1980s. A similar pattern has also been observed in New Zealand after its electricity industry was restructured in 1987, including power shortages in 1992, 2001, 2003 and 2008. Shortages of power supply are inconvenient to consumers whereas on the other hand, overbuilding indicates an inefficient allocation of resources. This study proposes a system dynamics model to study the problem. Advantages of this model over other approaches are discussed in this paper. The model is customised to incorporate the market structure and electricity industry in New Zealand, including the development phases of constructing a power plant under the Resource Management Act (RMA). The model is then used to study suitable precautionary frameworks that can be used to prevent power shortages and aid in creating an environment for optimum and timely generation expansion in the future. Possible future scenarios such as penetration of electric cars and adverse weather conditions are also included in this study. Some preliminary results are included and discussed.