Decision support for choice optimal power generation projects: Fuzzy comprehensive evaluation model based on the electricity market

In 2002, China began to inspire restructuring of the electric power sector to improve its performance. Especially, with the rapid increase of electricity demand in China, there is a need for non-utility generation investment that cannot be met by government finance alone. However, a first prerequisite is that regulators and decision-makers (DMs) should carefully consider how to balance the need to attract private investment against the policy objectives of minimizing monopoly power and fostering competitive markets. So in the interim term of electricity market, a decentralized decision-making process should eventually replace the centralized generation capacity expansion planning. In this paper, firstly, on the basis of the current situation, a model for evaluating generation projects by comprehensive utilization of fuzzy appraisal and analytic hierarchy process (AHP) is developed. Secondly, a case study of generation project evaluation in China is presented to illustrate the effectiveness of the model in selecting optimal generation projects and attracting private investors. In the case study, with considerations of attracting adequate private investment and promoting energy conservation in China, five most promising policy instruments selected as evaluation factors include project duration, project costs, predicted on-grid price level, environmental protection, enterprise credit grading and performance. Finally, a comprehensive framework that enables the DM to have better concentration and to make more sound decisions by combining the model proposed with modern computer science is designed. (c) 2005 Elsevier Ltd. All rights reserved.