IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v16y2023i4p1840-d1066611.html
   My bibliography  Save this article

A Review on the Internalization of Externalities in Electricity Generation Expansion Planning

Author

Listed:
  • Carlos Roberto de Sousa Costa

    (Federal Institute of Minas Gerais, Belo Horizonte 30575-180, Brazil
    ALGORITMI Research Center, Associate Laboratory for Intelligent Systems (LASI), University of Minho, 4800-058 Guimarães, Portugal)

  • Paula Ferreira

    (ALGORITMI Research Center, Associate Laboratory for Intelligent Systems (LASI), University of Minho, 4800-058 Guimarães, Portugal)

Abstract

This work addresses the internalization of externalities in energy decision making and in generation expansion planning (GEP). Although the linkage between externalities and energy is well recognized, the issue of the internalization in GEP models and from a sustainability perspective is still far from being fully explored. A critical literature review is presented, including scientific articles published in the period from 2011 to 2021 and selected from scientific databases according to a set of pre-defined keywords. The literature is vast and quite heterogeneous in the models and methods used to deal with these externalities, and therefore a categorization of these studies was attempted. This categorization was based on the methods used, the geographical scope, the externalities included in the planning model and the strategies for their inclusion. As a result, it was possible to perceive that most studies tend to focus on the internalization of externalities related to CO 2 and equivalent emissions from a national perspective. Departing from the critical analysis, pathways for future research were presented, highlighting the need to improve the internalization of social externalities to overcome environmental and economic bias, and also highlighting the importance of recognizing regional specificities and development priorities.

Suggested Citation

  • Carlos Roberto de Sousa Costa & Paula Ferreira, 2023. "A Review on the Internalization of Externalities in Electricity Generation Expansion Planning," Energies, MDPI, vol. 16(4), pages 1-19, February.
    • Handle: RePEc:gam:jeners:v:16:y:2023:i:4:p:1840-:d:1066611
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/16/4/1840/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/16/4/1840/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Chen, Hao & Tang, Bao-Jun & Liao, Hua & Wei, Yi-Ming, 2016. "A multi-period power generation planning model incorporating the non-carbon external costs: A case study of China," Applied Energy, Elsevier, vol. 183(C), pages 1333-1345.
    2. Qingtao Li & Jianxue Wang & Yao Zhang & Yue Fan & Guojun Bao & Xuebin Wang, 2020. "Multi-Period Generation Expansion Planning for Sustainable Power Systems to Maximize the Utilization of Renewable Energy Sources," Sustainability, MDPI, vol. 12(3), pages 1-18, February.
    3. Yuan, Jiahai & Xu, Yan & Kang, Junjie & Zhang, Xingping & Hu, Zheng, 2014. "Nonlinear integrated resource strategic planning model and case study in China's power sector planning," Energy, Elsevier, vol. 67(C), pages 27-40.
    4. Rajesh, K. & Bhuvanesh, A. & Kannan, S. & Thangaraj, C., 2016. "Least cost generation expansion planning with solar power plant using Differential Evolution algorithm," Renewable Energy, Elsevier, vol. 85(C), pages 677-686.
    5. Santos, Maria João & Ferreira, Paula & Araújo, Madalena, 2016. "A methodology to incorporate risk and uncertainty in electricity power planning," Energy, Elsevier, vol. 115(P2), pages 1400-1411.
    6. Henrik Lund & Finn Arler & Poul Alberg Østergaard & Frede Hvelplund & David Connolly & Brian Vad Mathiesen & Peter Karnøe, 2017. "Simulation versus Optimisation: Theoretical Positions in Energy System Modelling," Energies, MDPI, vol. 10(7), pages 1-17, June.
    7. John Dorrell & Keunjae Lee, 2020. "The Cost of Wind: Negative Economic Effects of Global Wind Energy Development," Energies, MDPI, vol. 13(14), pages 1-25, July.
    8. Ribeiro, Fernando & Ferreira, Paula & Araújo, Madalena, 2013. "Evaluating future scenarios for the power generation sector using a Multi-Criteria Decision Analysis (MCDA) tool: The Portuguese case," Energy, Elsevier, vol. 52(C), pages 126-136.
    9. Chen, Siyuan & Liu, Pei & Li, Zheng, 2019. "Multi-regional power generation expansion planning with air pollutants emission constraints," Renewable and Sustainable Energy Reviews, Elsevier, vol. 112(C), pages 382-394.
    10. Rodgers, Mark & Coit, David & Felder, Frank & Carlton, Annmarie, 2019. "Assessing the effects of power grid expansion on human health externalities," Socio-Economic Planning Sciences, Elsevier, vol. 66(C), pages 92-104.
    11. Fitiwi, Desta Z. & Lynch, Muireann & Bertsch, Valentin, 2020. "Enhanced network effects and stochastic modelling in generation expansion planning: Insights from an insular power system," Socio-Economic Planning Sciences, Elsevier, vol. 71(C).
    12. Hussain, Arif & Perwez, Usama & Ullah, Kafait & Kim, Chul-Hwan & Asghar, Nosheen, 2021. "Long-term scenario pathways to assess the potential of best available technologies and cost reduction of avoided carbon emissions in an existing 100% renewable regional power system: A case study of G," Energy, Elsevier, vol. 221(C).
    13. Moreira, João M.L. & Cesaretti, Marcos A. & Carajilescov, Pedro & Maiorino, José R., 2015. "Sustainability deterioration of electricity generation in Brazil," Energy Policy, Elsevier, vol. 87(C), pages 334-346.
    14. Kosugi, Takanobu, 2016. "Endogenizing the probability of nuclear exit in an optimal power-generation mix model," Energy, Elsevier, vol. 100(C), pages 102-114.
    15. Wierzbowski, Michal & Lyzwa, Wojciech & Musial, Izabela, 2016. "MILP model for long-term energy mix planning with consideration of power system reserves," Applied Energy, Elsevier, vol. 169(C), pages 93-111.
    16. Aryanpur, Vahid & Shafiei, Ehsan, 2015. "Optimal deployment of renewable electricity technologies in Iran and implications for emissions reductions," Energy, Elsevier, vol. 91(C), pages 882-893.
    17. Erica Gies, 2017. "The real cost of energy," Nature, Nature, vol. 551(7682), pages 145-147, November.
    18. Afful-Dadzie, Anthony & Afful-Dadzie, Eric & Awudu, Iddrisu & Banuro, Joseph Kwaku, 2017. "Power generation capacity planning under budget constraint in developing countries," Applied Energy, Elsevier, vol. 188(C), pages 71-82.
    19. Pietrapertosa, F. & Cosmi, C. & Di Leo, S. & Loperte, S. & Macchiato, M. & Salvia, M. & Cuomo, V., 2010. "Assessment of externalities related to global and local air pollutants with the NEEDS-TIMES Italy model," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(1), pages 404-412, January.
    20. Rodgers, Mark D. & Coit, David W. & Felder, Frank A. & Carlton, Annmarie, 2018. "Generation expansion planning considering health and societal damages – A simulation-based optimization approach," Energy, Elsevier, vol. 164(C), pages 951-963.
    21. Streimikiene, Dalia & Roos, Inge & Rekis, Janis, 2009. "External cost of electricity generation in Baltic States," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(4), pages 863-870, May.
    22. Stavros Petrou & Joseph Kwon & Jason Madan, 2018. "A Practical Guide to Conducting a Systematic Review and Meta-analysis of Health State Utility Values," PharmacoEconomics, Springer, vol. 36(9), pages 1043-1061, September.
    23. Pereira, Sérgio & Ferreira, Paula & Vaz, A.I.F., 2017. "Generation expansion planning with high share of renewables of variable output," Applied Energy, Elsevier, vol. 190(C), pages 1275-1288.
    24. Pedro R. R. Rochedo & Britaldo Soares-Filho & Roberto Schaeffer & Eduardo Viola & Alexandre Szklo & André F. P. Lucena & Alexandre Koberle & Juliana Leroy Davis & Raoni Rajão & Regis Rathmann, 2018. "The threat of political bargaining to climate mitigation in Brazil," Nature Climate Change, Nature, vol. 8(8), pages 695-698, August.
    25. Awopone, Albert K. & Zobaa, Ahmed F. & Banuenumah, Walter, 2017. "Techno-economic and environmental analysis of power generation expansion plan of Ghana," Energy Policy, Elsevier, vol. 104(C), pages 13-22.
    26. Shakouri G., H. & Aliakbarisani, S., 2016. "At what valuation of sustainability can we abandon fossil fuels? A comprehensive multistage decision support model for electricity planning," Energy, Elsevier, vol. 107(C), pages 60-77.
    27. Huang, Yun-Hsun & Wu, Jung-Hua & Hsu, Yu-Ju, 2016. "Two-stage stochastic programming model for the regional-scale electricity planning under demand uncertainty," Energy, Elsevier, vol. 116(P1), pages 1145-1157.
    28. Urban, F. & Benders, R.M.J. & Moll, H.C., 2007. "Modelling energy systems for developing countries," Energy Policy, Elsevier, vol. 35(6), pages 3473-3482, June.
    29. Liang, Yuanyuan & Yu, Biying & Wang, Lu, 2019. "Costs and benefits of renewable energy development in China's power industry," Renewable Energy, Elsevier, vol. 131(C), pages 700-712.
    30. Lakhani, Raksha & Doluweera, Ganesh & Bergerson, Joule, 2014. "Internalizing land use impacts for life cycle cost analysis of energy systems: A case of California’s photovoltaic implementation," Applied Energy, Elsevier, vol. 116(C), pages 253-259.
    31. Sadeghi, Hadi & Rashidinejad, Masoud & Abdollahi, Amir, 2017. "A comprehensive sequential review study through the generation expansion planning," Renewable and Sustainable Energy Reviews, Elsevier, vol. 67(C), pages 1369-1394.
    32. Zemo, Kahsay Haile & Panduro, Toke Emil & Termansen, Mette, 2019. "Impact of biogas plants on rural residential property values and implications for local acceptance," Energy Policy, Elsevier, vol. 129(C), pages 1121-1131.
    33. Wang, Jiang-Jiang & Jing, You-Yin & Zhang, Chun-Fa & Zhao, Jun-Hong, 2009. "Review on multi-criteria decision analysis aid in sustainable energy decision-making," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(9), pages 2263-2278, December.
    34. Cornes,Richard & Sandler,Todd, 1996. "The Theory of Externalities, Public Goods, and Club Goods," Cambridge Books, Cambridge University Press, number 9780521477185.
    35. Soderholm, Patrik & Sundqvist, Thomas, 2003. "Pricing environmental externalities in the power sector: ethical limits and implications for social choice," Ecological Economics, Elsevier, vol. 46(3), pages 333-350, October.
    36. Gitizadeh, Mohsen & Kaji, Mahdi & Aghaei, Jamshid, 2013. "Risk based multiobjective generation expansion planning considering renewable energy sources," Energy, Elsevier, vol. 50(C), pages 74-82.
    37. Urban, F. & Benders, R.M.J. & Moll, H.C., 2007. "Corrigendum to "Modelling energy systems for developing countries": [Energy Policy 35 (2007) 3473-3482]," Energy Policy, Elsevier, vol. 35(9), pages 4764-4765, September.
    38. Kumar Biswajit Debnath & Monjur Mourshed, 2018. "Author Correction: Challenges and gaps for energy planning models in the developing-world context," Nature Energy, Nature, vol. 3(6), pages 528-528, June.
    39. Juroszek, Zbigniew & Kudelko, Mariusz, 2016. "A model of optimization for local energy infrastructure development," Energy, Elsevier, vol. 96(C), pages 625-643.
    40. Kumar Biswajit Debnath & Monjur Mourshed, 2018. "Challenges and gaps for energy planning models in the developing-world context," Nature Energy, Nature, vol. 3(3), pages 172-184, March.
    41. Dranka, Géremi Gilson & Ferreira, Paula, 2018. "Planning for a renewable future in the Brazilian power system," Energy, Elsevier, vol. 164(C), pages 496-511.
    42. Tang, Bao-Jun & Li, Ru & Li, Xiao-Yi & Chen, Hao, 2017. "An optimal production planning model of coal-fired power industry in China: Considering the process of closing down inefficient units and developing CCS technologies," Applied Energy, Elsevier, vol. 206(C), pages 519-530.
    43. Rafaj, Peter & Kypreos, Socrates, 2007. "Internalisation of external cost in the power generation sector: Analysis with Global Multi-regional MARKAL model," Energy Policy, Elsevier, vol. 35(2), pages 828-843, February.
    44. Francesco Fuso Nerini & Julia Tomei & Long Seng To & Iwona Bisaga & Priti Parikh & Mairi Black & Aiduan Borrion & Catalina Spataru & Vanesa Castán Broto & Gabrial Anandarajah & Ben Milligan & Yacob Mu, 2018. "Mapping synergies and trade-offs between energy and the Sustainable Development Goals," Nature Energy, Nature, vol. 3(1), pages 10-15, January.
    45. Pereira, Sérgio & Ferreira, Paula & Vaz, A.I.F., 2014. "Short-term electricity planning with increase wind capacity," Energy, Elsevier, vol. 69(C), pages 12-22.
    46. Patrizio, P. & Leduc, S. & Chinese, D. & Kraxner, F., 2017. "Internalizing the external costs of biogas supply chains in the Italian energy sector," Energy, Elsevier, vol. 125(C), pages 85-96.
    47. Barteczko-Hibbert, Christian & Bonis, Ioannis & Binns, Michael & Theodoropoulos, Constantinos & Azapagic, Adisa, 2014. "A multi-period mixed-integer linear optimisation of future electricity supply considering life cycle costs and environmental impacts," Applied Energy, Elsevier, vol. 133(C), pages 317-334.
    48. Hans Christian Gils & Sonja Simon & Rafael Soria, 2017. "100% Renewable Energy Supply for Brazil—The Role of Sector Coupling and Regional Development," Energies, MDPI, vol. 10(11), pages 1-22, November.
    49. Verástegui, Felipe & Lorca, Álvaro & Olivares, Daniel & Negrete-Pincetic, Matias, 2021. "Optimization-based analysis of decarbonization pathways and flexibility requirements in highly renewable power systems," Energy, Elsevier, vol. 234(C).
    50. Pereira, Andrés & Sauma, Enzo, 2020. "Power systems expansion planning with time-varying CO2 tax," Energy Policy, Elsevier, vol. 144(C).
    51. Kim, Seunghyok & Koo, Jamin & Lee, Chang Jun & Yoon, En Sup, 2012. "Optimization of Korean energy planning for sustainability considering uncertainties in learning rates and external factors," Energy, Elsevier, vol. 44(1), pages 126-134.
    52. Quiroga, Daniela & Sauma, Enzo & Pozo, David, 2019. "Power system expansion planning under global and local emission mitigation policies," Applied Energy, Elsevier, vol. 239(C), pages 1250-1264.
    53. Aravena, Claudia & Hutchinson, W. George & Longo, Alberto, 2012. "Environmental pricing of externalities from different sources of electricity generation in Chile," Energy Economics, Elsevier, vol. 34(4), pages 1214-1225.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mohsin Dhali & Shafiqul Hassan & Umashankar Subramaniam, 2023. "Comparative Analysis of Oil and Gas Legal Frameworks in Bangladesh and Nigeria: A Pathway towards Achieving Sustainable Energy through Policy," Sustainability, MDPI, vol. 15(21), pages 1-30, October.
    2. Xian Huang & Kun Liu, 2023. "Impact of Electricity Price Expectation in the Planning Period on the Evolution of Generation Expansion Planning in the Market Environment," Energies, MDPI, vol. 16(8), pages 1-21, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Koltsaklis, Nikolaos E. & Dagoumas, Athanasios S., 2018. "State-of-the-art generation expansion planning: A review," Applied Energy, Elsevier, vol. 230(C), pages 563-589.
    2. Østergaard, P.A. & Lund, H. & Thellufsen, J.Z. & Sorknæs, P. & Mathiesen, B.V., 2022. "Review and validation of EnergyPLAN," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    3. Nock, Destenie & Levin, Todd & Baker, Erin, 2020. "Changing the policy paradigm: A benefit maximization approach to electricity planning in developing countries," Applied Energy, Elsevier, vol. 264(C).
    4. Fitiwi, Desta Z. & Lynch, Muireann & Bertsch, Valentin, 2020. "Enhanced network effects and stochastic modelling in generation expansion planning: Insights from an insular power system," Socio-Economic Planning Sciences, Elsevier, vol. 71(C).
    5. Aryanpur, Vahid & Atabaki, Mohammad Saeid & Marzband, Mousa & Siano, Pierluigi & Ghayoumi, Kiarash, 2019. "An overview of energy planning in Iran and transition pathways towards sustainable electricity supply sector," Renewable and Sustainable Energy Reviews, Elsevier, vol. 112(C), pages 58-74.
    6. Pereira, Sérgio & Ferreira, Paula & Vaz, A.I.F., 2017. "Generation expansion planning with high share of renewables of variable output," Applied Energy, Elsevier, vol. 190(C), pages 1275-1288.
    7. Fitiwi, Desta & Lynch, Muireann Á. & Bertsch, Valentin, 2019. "Optimal development of electricity generation mix considering fossil fuel phase-out and strategic multi-area interconnection," Papers WP616, Economic and Social Research Institute (ESRI).
    8. Koecklin, Manuel Tong & Longoria, Genaro & Fitiwi, Desta Z. & DeCarolis, Joseph F. & Curtis, John, 2021. "Public acceptance of renewable electricity generation and transmission network developments: Insights from Ireland," Energy Policy, Elsevier, vol. 151(C).
    9. Bojana Škrbić & Željko Đurišić, 2023. "Novel Planning Methodology for Spatially Optimized RES Development Which Minimizes Flexibility Requirements for Their Integration into the Power System," Energies, MDPI, vol. 16(7), pages 1-34, April.
    10. Constantino Dário Justo & José Eduardo Tafula & Pedro Moura, 2022. "Planning Sustainable Energy Systems in the Southern African Development Community: A Review of Power Systems Planning Approaches," Energies, MDPI, vol. 15(21), pages 1-28, October.
    11. Dagoumas, Athanasios S. & Koltsaklis, Nikolaos E., 2019. "Review of models for integrating renewable energy in the generation expansion planning," Applied Energy, Elsevier, vol. 242(C), pages 1573-1587.
    12. Yazdanie, M. & Orehounig, K., 2021. "Advancing urban energy system planning and modeling approaches: Gaps and solutions in perspective," Renewable and Sustainable Energy Reviews, Elsevier, vol. 137(C).
    13. Paulino Martinez-Fernandez & Fernando deLlano-Paz & Anxo Calvo-Silvosa & Isabel Soares, 2019. "Assessing Renewable Energy Sources for Electricity (RES-E) Potential Using a CAPM-Analogous Multi-Stage Model," Energies, MDPI, vol. 12(19), pages 1-20, September.
    14. Thushara, De Silva M. & Hornberger, George M. & Baroud, Hiba, 2019. "Decision analysis to support the choice of a future power generation pathway for Sri Lanka," Applied Energy, Elsevier, vol. 240(C), pages 680-697.
    15. Rodgers, Mark D. & Coit, David W. & Felder, Frank A. & Carlton, Annmarie, 2018. "Generation expansion planning considering health and societal damages – A simulation-based optimization approach," Energy, Elsevier, vol. 164(C), pages 951-963.
    16. Aghahosseini, Arman & Bogdanov, Dmitrii & Barbosa, Larissa S.N.S. & Breyer, Christian, 2019. "Analysing the feasibility of powering the Americas with renewable energy and inter-regional grid interconnections by 2030," Renewable and Sustainable Energy Reviews, Elsevier, vol. 105(C), pages 187-205.
    17. Strantzali, Eleni & Aravossis, Konstantinos, 2016. "Decision making in renewable energy investments: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 55(C), pages 885-898.
    18. Tang, Bao-Jun & Li, Ru & Li, Xiao-Yi & Chen, Hao, 2017. "An optimal production planning model of coal-fired power industry in China: Considering the process of closing down inefficient units and developing CCS technologies," Applied Energy, Elsevier, vol. 206(C), pages 519-530.
    19. Nayyar Hussain Mirjat & Mohammad Aslam Uqaili & Khanji Harijan & Mohd Wazir Mustafa & Md. Mizanur Rahman & M. Waris Ali Khan, 2018. "Multi-Criteria Analysis of Electricity Generation Scenarios for Sustainable Energy Planning in Pakistan," Energies, MDPI, vol. 11(4), pages 1-33, March.
    20. Hansen, Kenneth & Breyer, Christian & Lund, Henrik, 2019. "Status and perspectives on 100% renewable energy systems," Energy, Elsevier, vol. 175(C), pages 471-480.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:16:y:2023:i:4:p:1840-:d:1066611. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.