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An electricity generation planning model incorporating demand response

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  • Choi, Dong Gu
  • Thomas, Valerie M.

Abstract

Energy policies that aim to reduce carbon emissions and change the mix of electricity generation sources, such as carbon cap-and-trade systems and renewable electricity standards, can affect not only the source of electricity generation, but also the price of electricity and, consequently, demand. We develop an optimization model to determine the lowest cost investment and operation plan for the generating capacity of an electric power system. The model incorporates demand response to price change. In a case study for a U.S. state, we show the price, demand, and generation mix implications of a renewable electricity standard, and of a carbon cap-and-trade policy with and without initial free allocation of carbon allowances. This study shows that both the demand moderating effects and the generation mix changing effects of the policies can be the sources of carbon emissions reductions, and also shows that the share of the sources could differ with different policy designs. The case study provides different results when demand elasticity is excluded, underscoring the importance of incorporating demand response in the evaluation of electricity generation policies.

Suggested Citation

  • Choi, Dong Gu & Thomas, Valerie M., 2012. "An electricity generation planning model incorporating demand response," Energy Policy, Elsevier, vol. 42(C), pages 429-441.
    • Handle: RePEc:eee:enepol:v:42:y:2012:i:c:p:429-441
    DOI: 10.1016/j.enpol.2011.12.008
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    3. Koltsaklis, Nikolaos E. & Liu, Pei & Georgiadis, Michael C., 2015. "An integrated stochastic multi-regional long-term energy planning model incorporating autonomous power systems and demand response," Energy, Elsevier, vol. 82(C), pages 865-888.
    4. Guerra, Omar J. & Tejada, Diego A. & Reklaitis, Gintaras V., 2016. "An optimization framework for the integrated planning of generation and transmission expansion in interconnected power systems," Applied Energy, Elsevier, vol. 170(C), pages 1-21.
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    7. Xian Huang & Kun Liu, 2023. "Impact of Electricity Price Expectation in the Planning Period on the Evolution of Generation Expansion Planning in the Market Environment," Energies, MDPI, vol. 16(8), pages 1-21, April.
    8. Kirchem, Dana & Lynch, Muireann Á. & Bertsch, Valentin & Casey, Eoin, 2020. "Modelling demand response with process models and energy systems models: Potential applications for wastewater treatment within the energy-water nexus," Applied Energy, Elsevier, vol. 260(C).
    9. Kirchem, Dana & Lynch, Muireann Á & Casey, Eoin & Bertsch, Valentin, 2019. "Demand response within the energy-for-water-nexus: A review," Papers WP637, Economic and Social Research Institute (ESRI).
    10. Koltsaklis, Nikolaos E. & Dagoumas, Athanasios S. & Kopanos, Georgios M. & Pistikopoulos, Efstratios N. & Georgiadis, Michael C., 2014. "A spatial multi-period long-term energy planning model: A case study of the Greek power system," Applied Energy, Elsevier, vol. 115(C), pages 456-482.
    11. Chen, Hao & Tang, Bao-Jun & Liao, Hua & Wei, Yi-Ming, 2016. "A multi-period power generation planning model incorporating the non-carbon external costs: A case study of China," Applied Energy, Elsevier, vol. 183(C), pages 1333-1345.
    12. Ning Zhang & Hongcai Dai & Yaohua Wang & Yunzhou Zhang & Yuqing Yang, 2021. "Power system transition in China under the coordinated development of power sources, network, demand response, and energy storage," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 10(2), March.
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