Installation of renewable capacities to meet emission targets and demand under uncertainty

TL;DR

This paper investigates optimal strategies for installing renewable energy capacities under emission constraints, analyzing intervention timing and capacity expansion decisions under uncertainty to minimize costs.

Contribution

It introduces a framework for determining optimal intervention timing and capacity expansion strategies, including the insight that multiple interventions are often unnecessary.

Findings

Optimal intervention is usually single, not multiple.

Capacity expansions can be delayed in certain scenarios.

Strategies depend on uncertainty and emission constraints.

Abstract

This paper focuses on minimizing the costs related to renewable energy installations under emission constraints. We tackle the problem in three different cases. Assuming intervening once, we determine the optimal time to install and the optimal capacity expansions under uncertainty. By assuming the possibility of two or multiple interventions, we find that the optimal strategy is to intervene only once. We also prove that there are instances where capacity expansions should be delayed.