Impacts of Renewable Generation Expansion on Electricity Networks and the Environment: The Advantages of Solar Power Generation Expansions in Chile

Abstract

Nowadays, an important increment in the integration of renewable generation to the energy matrix has been established to decarbonize the power sector. However, as renewables are generally located far from load centers, market participants (generators), planning authorities, and network companies are facing an enormous challenge in coordinating their investments in order to get economic benefits. Nevertheless, the expansion of the system presents various environmental and social conflicts, in particular, with land uses that are valuable by society such as the presence of communities, national parks, protected forests, tourism zones, archaeological sites, etc. In this context, this work proposes a two-stage S-MILP model to co-optimize investment decisions in both generation (conventional and renewable plants) and the power transmission network in a cost-minimization framework, considering socio-environmental costs associated with new capacity installations located where land currently presents further valuable uses. Our modeled long-term market equilibrium shows that the solar generation is the most attractive alternative when we do consider these socio-environmental externalities given its location in less conflictive areas.