An Optimal CO2 Saving Dispatch Model for Wholesale Electricity Market Concerning Emissions Trade

Abstract

Deep CO2 mitigation provides a challenge to fossil fuel-fired power industry in liberalized electricity market process. To motivate generator to carry out mitigation action, this article proposed a novel dispatch model for wholesale electricity market under consideration of CO2 emission trade. It couples carbon market with electricity market and utilizes a price-quantity uncorrelated auction way to operate both CO2 allowances and power energy trade. Specifically, this CO2 saving dispatch model works as a dynamic process of, (i) electricity and environment regulators coordinately issue regulatory information; (ii) initial CO2 allowances allocation through carbon market auction; (iii) load demands allocation through wholesale market auction; and (iv) CO2 allowances submarket transaction. This article builds two stochastic mathematical programmings to explore generator’s auction decision in both carbon market and wholesale market, which provides its optimal price-quantity bid curve for CO2 allowances and power energy in each market. Through piece-wise adding up individual demand curve (supply curve) and matching with total supplied allowances (load demanded), market equilibrium is reached. Under this dispatch model, price upper-bound of bid allowances of generators is upward ordered and price lower-bound of bid electricity is downward ordered, according to their operational advantage from weak to strong. Meanwhile their bid electricity upper-bound gets respective capacity constraint or market share regulation. These features imply that the proposed model can prompt economic dispatch, improve resources allocation efficiency and bring about CO2 mitigation effect. Numerical simulations also verified the validity of this CO2 saving dispatch model.