The correlations of uncertainties in strategic energy planning models: the impact of fossil fuel prices on renewable energy deployment in Spain

Abstract

In the face of the global climate crisis, countries worldwide are striving for climate neutrality, necessitating a shift from fossil fuels to renewable energy sources. This energy transition faces deep uncertainties, requiring strategic energy planning to consider them and their interrelationships to avoid suboptimal decisions based on incoherent scenarios. This study applies a novel robust optimization approach to incorporate correlations between primary energy prices and energy technology investment costs into openMASTER, a long-term energy planning model. Using Spain's 2030 decarbonization goals as a case study, we assess the impact of accounting for these correlations on strategic energy decisions. Our results reveal that decarbonization strategies significantly vary with the correlation level. A positive correlation leads to higher fossil fuel use and lower renewable deployment, while a negative correlation results in maximum renewable deployment and electrification. The uncorrelated scenario incurs higher costs, highlighting savings when correlations are introduced. This study also provides policy insights and recommendations for future energy planning.