Dynamic Carbon-Constrained EPEC Model for Strategic Generation Investment Incentives with the Aim of Reducing CO2 Emissions

Jaber Valinejad,Michael Elsdon,Ameena Saad Al-Sumaiti,Taghi Barforoushi,Mousa Marzband

doi:10.3390/en12244813

Abstract

According to the European Union Emissions Trading Scheme, energy system planners are encouraged to consider the effects of greenhouse gases such as CO 2 in their short-term and long-term planning. A decrease in the carbon emissions produced by the power plant will result in a tax decrease. In view of this, the Dynamic carbon-constrained Equilibrium programming equilibrium constraints (DCC-EPEC) Framework is suggested to explore the effects of distinct market models on generation development planning (GEP) on electricity markets over a multi-period horizon. The investment incentives included in our model are the firm contract and capacity payment. The investment issue, which is regarded as a set of dominant producers in the oligopolistic market, is developed as an EPEC optimization problem to reduce carbon emissions. In the suggested DCC-EPEC model, the sum of the carbon emission tax and true social welfare are assumed as the objective function. Investment decisions and the strategic behavior of producers are included at the first level so as to maximize the overall profit of the investor over the scheduling period. The second-level issue is market-clearing, which is resolved by an independent system operator (ISO) to maximize social welfare. A real power network, as a case study, is provided to assess the suggested carbon-constrained EPEC framework. Simulations indicate that firm contracts and capacity payments can initiate the capacity expansion of different technologies to improve the long-term stability of the electricity market.

Highlights

In the quest for improving economic efficiency and promoting sustainable development, electric power industries have experienced major changes in the regulatory structure over the last few decades [1,2,3,4,5,6,7]
It is noted that, where the objective function is only to minimize carbon emissions, the market-clearing price may not be at the highest possible value, which is equal to the minimum bid price of the demands
Union Emissions Trading Scheme, energy system planners are encouraged to consider the effects of greenhouse gasses such as CO2 in their short-term and long-term planning

Summary

Introduction

In the quest for improving economic efficiency and promoting sustainable development, electric power industries have experienced major changes in the regulatory structure over the last few decades [1,2,3,4,5,6,7]. As one of the key facilitators of generation capacity expansion is the projected price of electricity in the future, effective market-clearing models should be used in order to settle the cost of electricity in the short term [13]. Appropriate models should be developed in order to assess the capacity to be installed and to research the effect of different market designs on generation capacity. The system includes 22 buses, 11 production units, 23 transmission lines, and 12,400/230 kV transformers.

Objectives

Results

Conclusion