2. Optimal operation and equipment investment planning of generation company

Optimal operation and equipment investment planning of generation company

  • Institute of Materials and Systems for Sustainability
  • Funded Research Division/Energy Systems (Chubu Electric Power)

Yusuke Manabe [Assistant Professor]


Outline of Seeds

It is likely that Japan will continue to see the power industry unbundle its power generation and transmission sectors while fully liberalizing retail sales; this in turn will drive a more diverse set of corporate players into the transmission side and vitalize the market (see figure 1). Entry into the power industry, however, is rife with uncertainties. It not only requires massive investment; success or failure also hinges on the changing state of the electricity market. Figure 2 shows electricity prices tracked by the Japan Electric Power exchange (JEPX), and we believe these large fluctuations indicate that success in the industry would be hard to come by. In this project, we analyze strategies expected to bring the highest return for power producers from the perspectives of electricity systems engineering and financial engineering.
We'll start with the question of how daily operations should be carried out in the power generation industry. Specifically, we will develop thermal or hydroelectric generator output plans, bidding strategies for the power market, output controls for solar or wind power generators, and charge-discharge control methods for power storage cells. Once operational policy is determined, we can derive the equipment configurations needed to run the operation. In addition, stochastic dynamic planning methods will be used to guide the optimum timing for investment by utilizing real option analysis concepts, which make it possible to determine the current value of deferring an investment action under uncertain conditions (e.g. electricity or fuel prices).

Novelty and originality of this research

Different companies can have very different operational policies. For example, one firm may want to set up a business that focuses on renewable energy sources like solar or wind power with coordinated usage of power storage cells, while another may plan to enter the market by developing new power generation technologies. Still another may want to not only maximize its expected profits, but also minimize its risk of loss should the business fail. Our research deals with optimal operation and development plans for power generation facilities in a way that can be tailored to match the operational policies set forth by companies like these, which are actually considering entry into the power industry.
Our work will also address capital investment plans designed for long-term project success rather than simply optimizing short-term power generation operations. We will consider power production strategy from both the perspective of short-term operational plans and long-term facilities plans (see figure 3).

Application and research area for Industry collaboration

With increasing deregulation likely to continue, we intend to work with companies looking to enter the field in order to make some assumptions about Japans power industry and from there figure out exactly what form the power generation side is likely to take. Collaboration in this research project will allow us to define the kinds of changes affecting the future of the electricity business from both an industrial and academic perspective.

Key Takeaway

Though I am new to the team since April 2014, I am committed to doing what it takes to improve the power industry not only in Japan, but around the world as well. I look forward to the opportunity to work with you!


Power production, electricity market, operational plan, facilities plan, renewable energy, power storage cell control


  • Solutions to unit commitment
  • Solar and wind power generation, coordinated storage cell control methods
  • Methods for making power source development plan decisions in the face of long-term uncertainty


  • Data processing computer; MATLAB, CPLEX, and other analytical software

Monographs, Papers and Articles

  • Yusuke Manabe, Ryoichi Hara, and Hiroyuki Kita, “Generation Expansion Planning Considering Mass Penetration of Renewable Energy Generation and Supply Reliability,” Electrical Engineering in Japan, vol. 189, no. 3, pp. 1-12, July 2014.
  • Yusuke Manabe, Ryoichi Hara and Hiroyuki Kita, ”Generation Expansion Planning Considering Mass Penetration of Renewable Energy Generation and Supply Reliability”, ICEE 2012, PP1-4, pp.802-807 (2012)