Long-term investment planning for the electricity sector in Small Island Developing States: Case study for Jamaica

Abstract Long term infrastructure investment planning for the electricity sector in Small Island Developing States typically optimizes generation and transmission investments sequentially. Compared to a simultaneous planning method, the current practice may result in a misallocation of scarce resources. To address this, this paper makes two contributions. First, it presents a framework for assessing two features of long-term planning models while accounting for economic and geographic idiosyncrasies of small island states. These are: i) the simultaneous vs sequential treatment of generation and transmission investments and ii) the impact of loop flow (a phenomenon intrinsic to electricity transmission networks) on long-term investment planning. Second, it quantifies the magnitude of omitting these model features using Jamaica as a test case. Depending on the initial conditions of the network, a simultaneous planning approach yields cost-efficiency gains in the order of 3.3%–3.6%. This is substantial when converted to financial costs and excess infrastructure investments. Importantly, energy modelers may want to think carefully about whether or not their results are liable to suffer from omitting these features and by making data and program codes publicly available, this paper broadens the scope for energy economic research in small island states.