Optimization method for renewable energy investment planning in the electricity carbon coupling market environment considering economy

Abstract

China is developing rapidly in renewable energy development, electricity market reform, and carbon market construction, using market mechanisms for efficient planning and investment. The electricity and carbon markets are interrelated for market entities. This context has led to a dual-level optimization model for renewable energy investment planning, considering cost recovery and new power system goals. The model includes deriving electricity carbon coupling quotations for conventional units based on dynamic carbon emission characteristics and proposing an electricity spot market mechanism influenced by carbon quota trading. The model’s upper level maximizes renewable energy investment capacity, determining its size and location, while the lower level simulates electricity spot and voluntary emission reduction market trading to guide investment decisions. The model transformed into a mixed integer linear programming problem for optimal solutions was validated numerically, examining various factors affecting optimal renewable energy investment capacity.