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A Multi-Period Optimization Model of Capacity Expansion Planning in the Electricity Industry Considering Different Carbon Dioxide Emission Limits
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A Multi-Period Optimization Model of Capacity Expansion Planning in the Electricity Industry Considering Different Carbon Dioxide Emission Limits

Author

Listed:
  • Dinmohammadi, Mostafa

    (Assistant Professor of Economics,University of Zanjan,Zanjan,Iran)

  • Sadeghi, Zeinolabedin

    (Associate Professor of Economics, Shahid Bahonar University of Kerman,Iran)

  • Davoud Khani, Nasrin

    (Master of Economics,University of Zanjan,Zanjan,Iran)

Abstract

The purpose of this study is to investigate the multi-period optimization model of capacity expansion planning in the electricity industry considering different scenarios of carbon dioxide emissions. In this study, using interperiod dynamic linear programming model, the capacity development of power plants has been designed and modeled in GAMS software. The objective function of the model has been to minimize the total discounted present value of investment cost, operation and maintenance cost, fuel cost and environmental cost in a 30-year horizon and with the constraints of supply and demand balance, power system security operation, the upper boundary of newly installed capacity, resource potential and grid stability. The proposed model was evaluated in different scenarios and sensitivity analysis. The results of the study showed that in the basic scenario without environmental considerations (reduction of production costs), only the capacity of fossil power plants should be expanded. Meanwhile, in the basic scenario with environmental considerations, the capacity of combined cycle, solar, atomic and wind power plants have been expanded by reducing production costs and environmental costs. Considering the environmental considerations, the generation share of steam and gas power plants in the planning horizon has decreased from 27.7 and 22.7 percent to 9.5 and 4 percent compared to the base year, but the generation share of combined cycle, nuclear, solar and wind power plants have increased from 41.8, 2.3, 0.1 and 0.1 percent to 72.7, 6.5, 2 and 2.3 percent. The investment cost (capacity expansion) of the basic scenario with environmental considerations compared to the basic scenario without environmental considerations will reach 183 billion dollars in the planning horizon with an increase of 60%, and the basic scenario with environmental considerations significantly increases the development costs. Also, in the scenario of the continuation of sanctions, when the maximum annual capacity of renewable power plants decreases, the environmental goals will not be met, and there is a need to invest in expanding the production capacity through fossil power plants. In the sensitivity analysis of the model, the results indicate that there is a need to invest in expanding the capacity of renewable power plants in the three cases of reducing the investment cost, increasing the carbon price, and fuel price

Suggested Citation

  • Dinmohammadi, Mostafa & Sadeghi, Zeinolabedin & Davoud Khani, Nasrin, 2023. "A Multi-Period Optimization Model of Capacity Expansion Planning in the Electricity Industry Considering Different Carbon Dioxide Emission Limits," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 10(3), pages 103-136, December.
    • Handle: RePEc:ris:qjatoe:0317
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    More about this item

    Keywords

    Optimization; linear programming; Power industry; CO2 Emissions;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • P18 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Energy; Environment
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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