The Impact of Fuel and CO2 Prices on Electricity Power Plans

The increasing uncertainty surrounding the electricity generating sector has implications on the forecasting accuracy and makes sensitivity analysis an essential tool for electricity power planning. The fuel price volatility and the emissions trading schemes represent major sources of uncertainty, as the relative economic interest of thermo power plants and of renewable energy sources largely depends on these two factors. In this paper, an electricity planning model will be used to analyse both these aspects, identifying the relative importance and sensitiveness of the optimal electricity power plans to changes on these parameters.