Long-Term Planning in Restructured Power Systems: Another important dimension in the modelling of investment decisions is how the timing

of new investments is taken into account. With a static representation it is assumed that a new investment must be undertaken immediately. Hence, the only concern is to decide whether or not to invest, and then also which project to invest in if there are several alternatives. In contrast, with a dynamic representation of investment decisions, the timing of new projects is also taken into account. Furthermore, the investment decisions are based on static assessments where future trends and uncertainties are not taken into account oth er than through the price extrapolation. This model is similar to the dynamic one (8), but it is only computed for one year of the horizon. Power System Investment Planning using Stochastic Dual Dynamic Programming: Planning problems can separated into two broad categories, static or dynamic. St atic planning seeks an optimal system state for a single time period in the future. The proble m isn t to decide when investments are made but to decide which investments are necessary t o deliver an optimal system at the future time period. Dynamic planning is used when multiple time periods are considered and an optimal investment sequence is needed for the whole planni ng duration. These problems must consider not only size and type of investment but also the t iming of the investment. A static optimisation method aims to nd the optimal set of investments for a xed future system state whereas a dynamic opti misation method aims to nd the optimal sequence of investments for any system state. Electric Power System Planning: 1.5.1 Static Versus Dynamic Planning Let us assume that our task is to decide on the subjects given above for 2015 2020. If the peak loading conditions are to be investigated, the studies involve six loading conditions. One way is to, study each year separately irrespective of th e other years. This type of study is referred to as static planning which focuses on planning for a single stage. The other is to focus on all six stages, simultaneo usly, so that the solution is found for all six stages at the same time. This type of study is named as dynamic planning. Obviously, although the static planning for a specific year provides some useful information for that year, the process as given above leads to impractical resul ts for the period as the solutions for a year cannot be independent from the soluti on from the preceding years. One way to solve the problem is to include the results of

each year in the studies for the following year. This may be referred to as semi static, semi-dynamic, quasi-static or quasi-dynamic planning. It is apparent that the dynamic planning solution can be more optimal in comparison with the semi-static planning solution. We should mention that the word dynamic here should not be confused with power system dynamics, already noted in Sect. 1.4. Power System Investment Planningusing Stochastic Dual DynamicProgramming: 3.1 STATIC VS. DYNAMIC PLANNING Planning problems can separated into two broad categories, static or dynamic. St atic planningseeks an optimal system state for a single time period in the futur e. The problem isn t todecide when investments are made but to decide which investme nts are necessary to deliver anoptimal system at the future time period. Dynamic planning is used when multiple time periodsare considered and an optimal invest ment sequence is needed for the whole planning duration.These problems must cons ider not only size and type of investment but also the timing of theinvestment.I nvestment planning in power systems can be either static or dynamic but the incr easing com-plexity of decision making means that dynamic planning will provide a more exible and thereforeuseful investment strategy. Deregulation of the electrici ty industry has dramatically increasedthe number of factors that must be conside red when planning and making investment decisions.These factors include competit or investments, environmental restrictions, pro t and regulatorycontrols alongside t he more traditional considerations of cost, location, timing and size. Thelandsc ape in which planning decisions are made can change rapidly and investments (or non-investments) can have direct e ects on price, competitor investment decisions an d consumerdemand response. To successfully optimise an investment plan that inco rporates these decisionfactors and studies their interactions, the planning mode l must be dynamic.