Electricity Generation Mix Considering Carbon Prices and Inter-regional Power Import

Abstract

The carbon neutrality target and carbon market have a considerable impact on the electricity production sector, which accounts for a major part of carbon emissions. Therefore, the electricity generation mix is jointly impacted by electricity markets and carbon markets. Here we model how the electricity generation mix can evolve and reach equilibrium under both power and carbon markets, given that the share of renewable energy resources keeps rising. Particularly, the generation mix of inter-regional power import and its interaction with domestic generation are modelled and discussed. To do so, we first use scarcity pricing as the power capacity remuneration mechanism. Then we model how the generation mix of a regional and inter-regional power import can evolve under electricity and carbon markets. At last, we verify the feasibility of the model through numerical examples.