Capacity expansion refers to the process of adding facilities to meet a rising demand for services or products. The goal of the research is to develop a precise mathematical model (based on a piecewisedeterministic Markov process) for the uncertainties in capacity expansion planning, and to study the construction of optimal plans with this framework by means of stochastic control theory. To provide a concrete context for the work, researchers plan to direct the research toward the specific capacity expansion plans faced by electric utilities. The research goal is being achieved by: (1) formulating a representative class of capacity expansion problems using demand and completion time data from electric utilities; (2) determining optimal controls or investment strategies for these problems using analytic and numerical techniques; and (3) implementing these optimization techniques on a computer and generating a set of clear, illustrative examples of their effectiveness.The potential commercial application as described by the awardee: An optimization technique for generation expansion planning would have direct application to determining reserve margins, adopting new technologies, selecting unit sizes, and ensuring reliability. In addition, such a technique would provide important leverage for addressing complex capacity expansion problems in other industries.
