Carbon Emissions and Their Costs in a Decarbonizing Northern European Power System: Insights From PLEXOS Modeling

Abstract

This study evaluates six prospective power system pathways for Finland, with a particular focus on emissionrelated outcomes. Using the energy system optimization software PLEXOS, the analysis covers a 20 -year analysis period from 2030 to 2049 and examines three key metrics: total emission production, emission intensity, and the costs of emission allowances. Emission intensity generally decreases substantially over time due to the increasing penetration of renewable electricity sources. Despite rising CO2 prices, costs of emission allowances decrease in most scenarios because overall emissions decline. In contrast, scenarios requiring new gas turbine installations project increasing emissions and related costs. Demand-side response proves to be highly effective: it reduces annual emissions by more than 44000 t of CO2 compared with a system without DSR, while also lowering costs of emission allowances by almost 8 M/a, and abates the need for additional gas turbines to maintain system reliability under high system stress.