Long-Term Stochastic Planning in Electricity Markets Under Carbon Cap Constraint: A Bayesian Game Approach

Abstract

Carbon price in an electricity market provides incentives for carbon emission abatement and renewable generation technologies. Policies constraining or penalizing carbon emissions can significantly impact the capacity planning decisions of both fossil-fueled and renewable generators. Uncertainties due to intermittency of various renewable generators can also affect the carbon emission policies. This paper proposes a Cournot-based long-term capacity expansion model taking into account carbon cap constraint for a partly concentrated electricity market dealing with stochastic renewables using a Bayesian game. The stochastic game is formulated as a centralized convex optimization problem and sol..