Pareto-optimal Solutions for trade-off analysis of CO2 vs. cost based on DP unit commitment

In order to solve the climate change problem, the European Union (EU) introduced the Emission Trading Scheme (ETS), which adopts `cap-and-trade' market mechanism for CO2 emission trading. In this scheme, each industrial installation and companies can buy and sell their allowances. Additionally, the carbon tax was introduced in mostly Nordic countries such as Finland. Under this system, the tax was imposed based on the amount of carbon contained in fuel, or the amount of CO2 emission. Influenced by institutional changes, the development of decision-making methods concerning both the emission trading and the ecological taxation are becoming increasingly important in the electric power sector. For this reason, we focus our attention on the trade-off analysis between CO2 and cost for the unit commitment problem. When the combination of generators and the fuel prices are decided, the marginal cost of CO2 utility function can be uniquely obtained. In this paper, we present an approach of trade-off analysis between CO2 emission and cost for unit commitment problem, which is based on the de-commitment procedure of unit commitment to obtain Pareto-optimal solutions of cost versus CO2 emission. The method is tested on the 10-unit 24-hour model.