Robust responses to climate change via stochastic MARKAL: The case of Québec

Future patterns of climate change and economic growth are critical parameters in long-term energy planning. This paper describes a multi-stage stochastic programming approach to formulate a flexible energy plan. The plan incorporates multiple future scenarios and provides for mid-course corrections depending upon the actual realizations of future uncertainties. Results are derived from the stochastic version of Extended MARKAL (MARKet ALlocation) model for Québec, developed for this purpose. The analysis indicates significant savings of overall system cost in using a hedging strategy over any of the perfect foresight ones. With a 50% probability of implementing stringent carbon mitigation measures after 15 years, the emission trajectory takes the middle path till this uncertainty is resolved. Prior to resolution, electricity supply follows the middle path, natural gas and renewable energy tend to follow the low mitigation trajectory, and oil supply approaches the high mitigation trajectory. A set of specialized hedging technologies has been identified, which emerges more competitive in the hedging strategy than in any of the perfect foresight ones. The paper concludes that such treatment of future uncertainties can give insights that are beyond the scope of an analysis based on deterministic scenarios.