Emission trading mechanism for environmental economic generation dispatch

Abstract

Economic and emission dispatch of a power system is a well-known multi-objective optimization problem. The purpose of this paper is to present a new approach to formulate the problem as a single-objective optimization problem incorporating a practical emission trading mechanism by considering cap-and-trade scheme which is successfully used in USA. The economic and emission dispatch problem is solved by a two-stage optimization process to cope with the cap-and-trade program. In the first-stage, required emission allowances to supply a particular demand is estimated by a pre-dispatching process that takes into account unit commitment and set bid price (BP) of the primary emission market auction. In the second-stage, final dispatch is calculated using unit commitment, primary emission market bid settlement price (BSP), and secondary market price (SMP) of emission allowances. The performance of the proposed dispatching process is validated by a case study on a modified IEEE 30 bus system which includes three cases indicating that the proposed method (PM) provides the optimal combined solution of economic and emission dispatch for electric utilities.