Optimizing government strategy for deep decarbonization in towns: A game theory approach incorporating energy storage services

Abstract

Renewable district energy systems present a promising solution for decarbonizing the energy sector. However, optimal strategies to mitigate the financial challenges of deep decarbonization are still underexplored. This study aims to optimize government subsidy strategies and users' system designs to facilitate cost-effective deep decarbonization using game theory. Two indicators, the renewable generation rate (RGR) and the self-sufficiency rate (SSR), are formulated to understand the principles of achieving deep decarbonization. Additionally, the study introduces a new strategy called subsidy plus energy storage service (SUB + ESS), contrasting it with the traditional subsidy-only strategy. Key findings indicate that merely increasing the RGR requirements does not achieve deep decarbonization due to energy mismatches. Restricting the SSR requirements proves effective in achieving deep decarbonization but imposes a significant economic burden on the government. When the SSR requirement is set at 100%, carbon emissions are reduced by 93%, but the government's subsidy expenditure increases nearly fivefold. In contrast to the subsidy-only strategy, the novel SUB + ESS strategy, with a 100% SSR requirement, reduces government expenditure by approximately 52% and lowers total expenditure by 19.7%. A two-stage decarbonization strategy is proposed: initially, offering subsidies is sufficient, but as deeper decarbonization is pursued, establishing energy storage service becomes essential.