Carbon tax, system marginal price and environmental policies on Smart Microgrid operation

Abstract

PurposeThe purpose of this paper is to optimally operate a Smart Microgrid which is interconnected to the main grid so as to minimize expenditures associated with CO2 emissions. Microgrids could come into play to aid the network through CO2 emission reduction while increasing their efficiency through local generation. For this purpose, a Smart Microgrid incorporating Distributed Energy Resources (DER), especially Renewable Energy Sources (RES), is operated optimally while keeping the CO2 emissions in check in order to minimize the financial burden from emissions stemming from the carbon tax. Since the network is assumed to be interconnected with the main grid, there is a consideration of the expected emissions associated with the imported energy.Design/methodology/approachAn economic/environmental dispatch problem is mathematically formulated using an objective function and the constraints that it is subject to. The methodology is applied on a typical 17-bus test distribution network, representing a Hellenic LV network. Various carbon tax rates and their impact on the system marginal price are examined, in terms of their effect on distributed generation (DG) and as a second step, the effect of imposing lower carbon tax rates for micro-sources with the goal of benefitting from their more eco-friendly generation capabilities. In order to assess that benefit, hourly grid emissions coefficients are derived based on actual grid data.FindingsThe CO2 tax refund policy towards the DG owners can lead to optimal coverage of consumers, optimal financial result both for the DG owners and the operator and greater DG integration within the smart grid.Originality/valueGreater DG integration within the smart grid by using a CO2 tax refund policy.