Integration of CCS, emissions trading and volatilities of fuel prices into sustainable energy planning, and its robust optimization

In this paper, a new approach has been proposed that allows a robust optimization of sustainable energy planning over a period of years. It is based on the modified energy flow optimization model (EFOM) and minimizes total costs in planning capacities of power plants and CCS to be added, stripped or retrofitted. In the process, it reduces risks due to a high volatility in fuel prices; it also provides robustness against infeasibility with respect to meeting the required emission level by adopting a penalty constant that corresponds to the price level of emission allowances. In this manner, the proposed methodology enables decision makers to determine the optimal capacities of power plants and/or CCS, as well as volumes of emissions trading in the future that will meet the required emission level and satisfy energy demand from various user-sections with minimum costs and maximum robustness. They can also gain valuable insights on the effects that the price of emission allowances has on the competitiveness of RES and CCS technologies; it may be used in, for example, setting appropriate subsidies and tax policies for promoting greater use of these technologies. The proposed methodology is applied to a case based on directions and volumes of energy flows in South Korea during the year 2008.