TY - JOUR
T1 - An impact assessment of electricity and emission allowances pricing in optimised expansion planning of power sector portfolios
AU - Tolis, Athanasios I.
AU - Rentizelas, Athanasios A.
PY - 2011/11
Y1 - 2011/11
N2 - The present work concerns a systematic investigation of power sector portfolios through discrete scenarios of electricity and CO(2) allowance prices. The analysis is performed for different prices, from regulated to completely deregulated markets, thus representing different electricity market policies. The modelling approach is based on a stochastic programming algorithm without recourse, used for the optimisation of power sector economics under multiple uncertainties. A sequential quadratic programming routine is applied for the entire investigation period whilst the time-dependent objective function is subject to various social and production constraints, usually confronted in power sectors. The analysis indicated the optimal capacity additions that should be annually ordered from each competitive technology in order to substantially improve both the economy and the sustainability of the system. It is confirmed that higher electricity prices lead to higher financial yields of power production, irrespective of the CO(2) allowance price level. Moreover, by following the proposed licensing planning, a medium-term reduction of CO(2) emissions per MW h by 30% might be possible. Interestingly, the combination of electricity prices subsidisation with high CO(2) allowance prices may provide favourable conditions for investors willing to engage on renewable energy markets. (C) 2011 Elsevier Ltd. All rights reserved.
AB - The present work concerns a systematic investigation of power sector portfolios through discrete scenarios of electricity and CO(2) allowance prices. The analysis is performed for different prices, from regulated to completely deregulated markets, thus representing different electricity market policies. The modelling approach is based on a stochastic programming algorithm without recourse, used for the optimisation of power sector economics under multiple uncertainties. A sequential quadratic programming routine is applied for the entire investigation period whilst the time-dependent objective function is subject to various social and production constraints, usually confronted in power sectors. The analysis indicated the optimal capacity additions that should be annually ordered from each competitive technology in order to substantially improve both the economy and the sustainability of the system. It is confirmed that higher electricity prices lead to higher financial yields of power production, irrespective of the CO(2) allowance price level. Moreover, by following the proposed licensing planning, a medium-term reduction of CO(2) emissions per MW h by 30% might be possible. Interestingly, the combination of electricity prices subsidisation with high CO(2) allowance prices may provide favourable conditions for investors willing to engage on renewable energy markets. (C) 2011 Elsevier Ltd. All rights reserved.
KW - emissions trading
KW - power sector portfolio
KW - real options
KW - operational research
KW - electricity prices
KW - optimisation
UR - http://www.sciencedirect.com/science/article/pii/S0306261911002893
UR - http://www.sciencedirect.com/science/journal/03062619
U2 - 10.1016/j.apenergy.2011.04.054
DO - 10.1016/j.apenergy.2011.04.054
M3 - Article
SN - 0306-2619
VL - 88
SP - 3791
EP - 3806
JO - Applied Energy
JF - Applied Energy
IS - 11
ER -
