Designing tax and subsidy incentives towards a green and reliable electricity market

Abstract

Incentive schemes and policies play an important role in reducing carbon emissions from electricity generation. This paper investigates designing tax and subsidy incentives towards a reliable and low emission electricity market, using Australia's National Electricity Market as a case study. In this work, a novel framework is proposed to design interactive tax/subsidy incentives on both emission reduction and resource adequacy in competitive electricity markets as a game model. In our model, market participants decide on their capacity expansion/retirement strategies considering the impact of designed incentive schemes on their long-term operation such that the desired levels of emission redu..