A Multi-Period Optimization Model of Capacity Expansion Planning in the Electricity Industry Considering Different Carbon dioxide emission limits

Document Type : Research Paper


1 Assistant Professor of Economics, Faculty of Social Sciences, University of Zanjan, Zanjan, Iran

2 Associate Professor of Economics, Shahid Bahonar University of Kerman

3 Master of Economics, University of Zanjan


The purpose of this study is to investigate the multi-period optimization model of capacity expansion planning in the electricity industry considering different scenarios of carbon dioxide emissions. In this study, using interperiod dynamic linear programming model, the capacity development of power plants has been designed and modeled in GAMS software.
The objective function of the model has been to minimize the total discounted present value of investment cost, operation and maintenance cost, fuel cost and environmental cost in a 30-year horizon and with the constraints of supply and demand balance, power system security operation, the upper boundary of newly installed capacity, resource potential and grid stability. The proposed model was evaluated in different scenarios and sensitivity analysis.
The results of the study showed that in the basic scenario without environmental considerations (reduction of production costs), only the capacity of fossil power plants should be expanded. Meanwhile, in the basic scenario with environmental considerations, the capacity of combined cycle, solar, atomic and wind power plants have been expanded by reducing production costs and environmental costs. Considering the environmental considerations, the generation share of steam and gas power plants in the planning horizon has decreased from 27.7 and 22.7 percent to 9.5 and 4 percent compared to the base year, but the generation share of combined cycle, nuclear, solar and wind power plants have increased from 41.8, 2.3, 0.1 and 0.1 percent to 72.7, 6.5, 2 and 2.3 percent. The investment cost (capacity expansion) of the basic scenario with environmental considerations compared to the basic scenario without environmental considerations will reach 183 billion dollars in the planning horizon with an increase of 60%, and the basic scenario with environmental considerations significantly increases the development costs. Also, in the scenario of the continuation of sanctions, when the maximum annual capacity of renewable power plants decreases, the environmental goals will not be met, and there is a need to invest in expanding the production capacity through fossil power plants. In the sensitivity analysis of the model, the results indicate that there is a need to invest in expanding the capacity of renewable power plants in the three cases of reducing the investment cost, increasing the carbon price, and fuel price.


Main Subjects

  1. Amirnekooei, K., Ardehali, M. M., & Sadri, A. (2012). Integrated resource planning for Iran: Development of reference energy system, forecast, and long-term energy-environment plan. Energy, 46(1), 374-385.‏
  2. Begum, R. A., Sohag, K., Abdullah, S. M. S., & Jaafar, M. (2015). CO2 emissions,energy consumption, economic and population growth in Malaysia. Renewable and Sustainable Energy Reviews, 41, 594-601.‏
  3. Petrоleum, B., Statistical Review of World Energy. 2022, BP
  4. Cong, R. G. (2013). An optimization model for renewable energy generation and its application in China: a perspective of maximum utilization. Renewable and Sustainable Energy Reviews, 17,
  5. Emissions, G. G. (2011). Comparison of lifecycle greenhouse gas emissions of various electricity generation sources.‏‏
  6. Felver, T. B. (2020). How can Azerbaijan meet its Paris Agreement commitments: assessing the effectiveness of climate change-related energy policy options using LEAP modeling. Heliyon, 6(8), e04697.‏
  7. Guerra, O. J., Tejada, D. A., Rodríguez, R., & Reklaitis, G. V. (2015). A spatial multi-period mixed integer linear programming (MILP) model for optimal power planning: CO2 emissions mitigation. In Computer Aided Chemical Engineering(Vol. 37, pp. 2345-2350). Elsevier.‏
  8. Hashim, H., Douglas, P., Elkamel, A., & Croiset, E. (2005). Optimization model for energy planning with CO2 emission considerations. Industrial & engineering chemistry research, 44(4), 879-890.
  9. Hatami, Y. (2019). Planning the development of power generation considering environmental conditions under conditions of uncertainty and load distribution between power plants. PhD Thesis, Shahid Bahonar University, Kerman (In Persian).
  10. Henggeler, C. A., Martins, A. G., & Brito, I. S. (2004). A multiple objective mixed intege linear programming model for power generation expansion planning. Energy, 29(4), 613-627.
  11. Hobbs, F. (1995). Optimization methods for electric utility resource planning. Europea Journal of Operational Research, 83(1), 1-20.‏
  12. Islamic Council Research Center. (2016). Expert opinion on: Paris Agreement bill. Offices of basic studies and legal studies. Machine gun number: 25015072, available at: http://www.rc.maglis.ir (In Persian).
  13. Lund, H., & Mathiesen, B. V. (2012). The role of carbon capture and storage in a future sustainable energy system. Energy,44(1), 469-476.‏
  14. Manzor, D., & Aryanpour, V. (2018). A critique on the development of the country's power plant capacity; Evaluation of the degree of deviation from the optimal state. Scientific research quarterly, economic growth and development researches. Year 8, Number 30, 67-82 (In Persian).
  15. Mathiesen, B. V., Lund, H., & Karlsson, K. (2011). 100% Renewable energy systems, climate mitigation and economic growth. Applied energy88(2), 488-501.
  16. Ministry of Power. (2019). A review of 31 years of energy statistics of the country. Bureau of Electricity and Energy Planning and Macroeconomics (In Persian).
  17. Ministry of Power. (2019). Energy balance sheet for 2017. Bureau of Electricity and Energy Planning and Macroeconomics (In Persian).
  18. Mirzaesmaeeli, H. 2007. A Multi-Period Optimization Model for Energy Planning with CO2 Emission Consideration. Master Thesis, Univ. of Waterloo, St Ontario, Canada.
  19. Nakhaeinejad, , Abbasi, M., ZareMehrjerdy, Y., & Asadi Zarch, A. (2022).Greenhouse gas emission reduction model: an integrated approach of linear programming and system dynamics The case of Iranian power plants. Journal of Production and Operations Management, 13(1), 51-77.‏
  20. Nekouei, N. (2017). Spatial analysis of energy consumption and pollution from power plants in Iran. Master thesis, Shahid Bahonar University, Kerman (In Persian).
  21. O'Mahony, T., Zhou, P., & Sweeney, J. (2013). Integrated scenarios of energy-related CO2 emissions in Ireland: A multi-sectoral analysis to 2020. Ecological Economics, 93, 385-397.‏
  22. Pfeiffer, A., Hepburn, C., Vogt-Schilb, A., & Caldecott, B. (2018). Committed emissions from existing and planned power plants and asset stranding required to meet the Paris Agreement. Environmental Research Letters, 13(5), 054019.‏
  23. Rentizelas, A. A., Tolis, A. I., & Tatsiopoulos, I. P. (2012). Investment planning in electricity production under CO2 price uncertainty. International Journal of Production Economics, 140(2), 622-629.‏
  24. Shirmohammadi, R., Soltanieh, M., & Romeo, L. M. (2018). Thermoeconomic analysis and optimization of post‐combustion CO2 recovery unit utilizing absorption refrigeration system for a natural‐gas‐fired power plant. Environmental Progress & Sustainable Energy, 37(3), 1075-1084.‏‏
  25. Shiripour, M. (2014). A new optimization model for power generation expansion planning under uncertainty considerations and environmental considerations. Master thesis, University of Tehran, Tehran (In Persian).
  26. Statistics and data. (2020). Central bank. Available at: http://www.cbi.ir (In Persian).
  27. Taghizadeh Yazdi, M. (2012). Designing a mathematical model for the development of electricity production capacity in Iran with the aim of controlling greenhouse gases. PhD Thesis, University of Tehran, Tehran (In Persian).
  28. Tavanir specialized parent company. (2019). Detailed statistics of Iran's electricity industry, especially for strategic management in 2019. Tehran (In Persian).
  29. Teng, F., Wang, X., & Zhiqiang, L. V. (2014). Introducing the emissions trading system to China’s electricity sector: Challenges and opportunities. Energy Policy, 75, 39-45.‏
  30. Thi Hiep, D. & Hoffmann, C. (2020). A power development planning for Vietnam under the CO2 emission reduction targets. Energy Reports, 6, 19-24.
  31. Vazhayil, J. P., & Balasubramanian, R. (2013). Optimization of India's power sector strategies using weight-restricted stochastic data envelopment analysis. Energy Policy, 56, 456-465.‏
  32. Wu, J. H., & Huang, Y. H. (2014). Electricity portfolio planning model incorporating renewable energy characteristics. Applied energy, 119, 278-287.‏
  33. Xydis, G., & Koroneos, C. (2012). A linear programming approach for the optimal planning of a future energy system. Potential contribution of energy recovery from municipal solid wastes. Renewable and Sustainable Energy Reviews, 16(1), 369-378.‏
  34. Zhang, D., Liu, P., Ma, L., & Li, Z. (2013). A multi-period optimization model for optimal planning of China's power sector with consideration of carbon mitigation—The optimal pathway under uncertain parametric conditions. Computers & chemical engineering, 50, 196-206.‏
  35. Zhang, D., Liu, P., Ma, L., Li, Z., & Ni, W. (2012). A multi-period modelling and optimization approach to the planning of China's power sector with consideration of carbon dioxide mitigation. Computers & Chemical Engineering, 37, 227-247.‏