Impact of carbon pricing on distributed energy systems planning

Abstract Carbon pricing is being implemented by several governments to curb CO2 emissions. This work studies its impact on distributed energy systems design which are powered by both renewable and fossil fuels. In particular, the analyses investigate a real case study situated in Singapore, characterized by cooling and electricity demands. The goal of the analyses is to determine whether carbon pricing does impact design choices in meeting the energy demands of a user located in a cooling dominated region, and secondly in assessing the effectiveness of carbon pricing as a CO2 emissions mitigation policy. This is achieved by investigating the optimal design of the energy systems meeting the demands of the test case under different carbon pricing and primary energy supply costs assumptions. The results indicate that the optimal design under current conditions heavily relies on PV with more than 10 MWp worth of capacity and that an increasing carbon pricing would lead to a lower environmental footprint. But if the supply costs for natural gas were to lower, the optimal design would switch to relying on a combined cooling heat and power-based electricity generation system up to 3 MWe, increasing the primary energy consumptions regardless of the carbon pricing scheme in place. This would also happen even at significantly higher prices than the scheme under evaluation.