Portfolio risk analysis based generation expansion planning considering CO2 trading

This paper presents a new generation expansion model that considers the fluctuation of fuel prices and effects of CO₂ trading. This model is applied to Viet Nam power sector during 2013-2030. This model finds out the efficient curve containing all feasible technology mixes. Each feasible mix represented by a value of risk-aversion factor has different value of risk, revenue from CO₂ trading and present value of total cost (PVTC). The result shows that the higher the PVTC, the lower the volatility of fuel cost and the higher the revenue from CO₂ trading. In the case of Viet Nam, if the investor selects high value of risk-aversion factor, renewables, such as solar and win, will become attractive. Furthermore, coal will be the dominant technology that replaces gas and oil.