Generation investment decision-making at the change of electricity market and CO₂ emission policy

In order to reveal the effects of CO₂ emission policy and some other uncertain factors in the operation process on the investment decision-making of thermal power plants, a mathematical model considering the variations of the uncertain factors is established, and a new methodological framework of generation investment decision-ma-king is developed based on the option game theory. Then, on the assumption that the generation investment in diffe-rent generation companies are performed sequentially, a solution based on the Barraquand-Martineau (B-M) option pricing model is presented. Finally, the proposed method is illustrated by a simulation. Numerical results indicate that the proposed framework well considers multiple uncertain factors and simulates the dynamic game process of thermal power plants in the planning period in stochastically-varied market environments.