The awareness of the close relationships between global warming and GHG (Greenhouse Gas) emission has risen enormously during the latest years. To set a bound on CO2 emissions, in the EU a CO2 cap is assigned to each Member State (EUA: European Union Allowance) and a market for trading emission allowances (ETS) is presently in place. The price of CO2 allowances has an impact on the power market clearing, which in turn affects not only the generation dispatch, particularly the fossil fuel units, but also the transmission system planning. An optimal planning of a transmission system does clearly allow a more efficient power production and a consequent overall CO2 reduction.
Thus, a quantitative evaluation of the reduction of GHG emissions is nowadays a further index to be considered in the selection of the optimal grid expansion strategy. Indeed, accounting for the CO2 emission costs (€/ton) affects the inter-area power and energy exchanges and, as a consequence, the optimal level of net transfer capacity to catch the overall benefits related to: enhancement of security of supply, energy price reduction and environmental impact.
In Italy and in France new procedures, based on market simulators, have been developed, able to calculate with sufficient accuracy the environmental impact, in terms of CO2 emissions, over mid- and long-term horizons when enhancing the network transmission capacity. The power market simulator (NEWPROMED), developed in Italy, is specifically tailored to simulate over a whole year a “zonal” market, with consequent market splitting at the occurrence of inter-zonal congestion. The simulator allows taking into account the cost of CO2 emissions in the bidding strategy and quantifying the GHG emissions in the overall generation system and for each generating unit following the relaxation of an inter-zonal constraint. In France, a new multi-area adequacy simulator (ANTARES: A New Tool for Adequacy Reporting of Electric Systems) is in use, which performs on the one hand a regional adequacy assessment and on the other hand a regional market simulation, modelling consistently several countries assuming a perfectly competitive market, and supplying globally a wide range of technical, economic, and market-oriented indicators
The effectiveness of the above power market simulators accounting for the forward costs of CO2 allowances is shown in transmission planning applications for the prioritisation of reinforcements between market areas in Italy and at the border between Italy and France.