Generation Capacity Expansion with CO2 Emission and Transmission Constraints in an Oligopolistic Market

The European Union is committed to cut Greenhouse Gas emissions (GHGs) by 30% of 1990 levels by 2020; other countries are committed to make similar reductions under a global agreement. Some technical options are available on the supply side, to reduce GHG and other harmful emissions by the power sector. Therefore, it is important to analyze what type of power generation technologies will be chosen by companies under different CO2 mitigation targets. Several models look into Generation Expansion Planning in oligopolistic markets; however, they do not consider the impact of CO2 reduction targets and the transmission constraints together. This study presents a Generation Expansion planning model with transmission constraints for analyzing the implications of CO2 emission mitigation constraints for investment decisions in oligopolistic electricity markets. The results of the model are presented with reference to the Italian power sector, responsible for 32% of national CO2 emissions.