Insights into the Thermal Generation Futures of Isolated Island Electricity Systems Using System Dynamics

In future, long-term thermal generation investments will be greatly influenced by the best available mixes of legacy fossil fuels and renewable sources. Intuitively, a detailed first look at the dynamics which surrounds thermal investments will assist policy makers in shaping optimally required generation mixes. To achieve this, a system dynamics model of an isolated island electricity system was developed. This model gauges the long-term investment decisions that can exist within such systems. It addresses the thermal capacity additions and the extent to which financially influenced and demand growth influenced additions affects the long-term stability of the system. Reflecting a reality typical of island systems, this model does not have a supply and demand driven pricing mechanism and thus adopts exogenous electricity tariffs. It however accounts endogenously for changes in the thermal capacity margins and capacity costing. The case study used considers the Azorean island of Sao Miguel; which provides a background for the model and is used for testing its ability to capture various aspects of historical behaviors and real-world influences on the long-term thermal generation decisions. The paper concludes with a discussion of the investment decision insights gained and the possible future extensions, uses and modifications of the model