Group for Research in Decision Analysis

An Oligopolistic, Electricity Generation Expansion Model Which Incorporates Carbon Emissions Trading and Green Certificates

Dr. Pedro Linares

We present a generation expansion model for the power sector which incorporates several features that make it very interesting for its application to current electricity markets: it considers the possible oligopolistic behavior of firms, and incorporates relevant policy instruments such as carbon emissions trading and tradeable green certificates. It combines powerful traditional tools related to the detailed system operation with techniques for modeling the economic market equilibrium and a formulation for the resolution of the emissions permit and tradeable green certificates market equilibriums. The model is formulated as a Linear Complementarity Problem (LCP) which allows to solve simultaneously the optimization problem for each firm considering the power, carbon and green certificate markets. The model has been implemented in GAMS. An application to the Spanish power system is also presented.

Pedro Linares is a Visiting Scholar in the Mossavar-Rahmani Center for Business and Government at the John F. Kennedy School of Government, Harvard University. He is Professor of Industrial Organization at Universidad Pontificia Comillas, Madrid, Deputy Director of the Instituto de Investigación Tecnológica (IIT), and Coordinator of the BP Chair for Sustainable Development of the same institution. He holds a M.S. and Ph.D. in Agricultural Economics from U. Politécnica, Madrid. His research focuses on the relationship between energy, economics and environment, and specifically on sustainable energy policies, environmental policy instruments, renewable energy policy, and multicriteria methods applied to resource allocation. He has published about these issues in the Journal of the Operations Research Society, OMEGA, IEEE Transactions on Power Systems, and the Energy Journal. He has also been a consultant for several private and public institutions in Spain, Europe and Latin America.