Impact of greenhouse gas emission constraints on the electrical system of continental Europe

The purely economic approach world-wide followed by electric market actors in the recent years led to a significant increase of cross border power trades. But nowadays, after the entry into force of the Kyoto protocol, it is possible that new environmental obligations concerning the emission of greenhouse gases (GHG) could partially modify this approach. Two main impacts on the electric sector could be envisaged: first, an increase of the electricity price for final customers, due to higher costs in power generation and, second, a different distribution of the power flows among the countries, related to different national behaviours and needs in respecting the GHG constraints. With the aim of preventing high burdens, the European union promoted the so-called emission trading scheme (EU-ETS). This mechanism allows some industrial activities, that cause GHG pollution, to develop a trading of allowances within the Community in order to promote reductions of emissions in a cost-effective and economically efficient manner. The paper will assess the impact of Kyoto constraints and of the proposed EU-ETS scheme on the European power system presenting a suitable multi-area optimisation tool and its application to study the optimal operation of the interconnected network of Western Europe.