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This paper studies the biomass–coal co-firing (BCC) production planning problem under the carbon emission quota allocation (CEQA) mechanism. However, carbon emission parameters are uncertain due to many factors, such as the type of power units and coal quality. To address this challenge issue, this paper proposes a new globalized robust bi-level optimization model, where the uncertain parameters are characterized by a pair of uncertainty sets. In the proposed model, the upper government as the leader decides the CEQA mechanism, while the lower power plants as the followers develop the production planning according to the given CEQA mechanism. Moreover, based on the Lagrange duality theory and Karush–Kuhn–Tucker (KKT) conditions, the proposed model is equivalently converted into a computationally tractable single-level model. Finally, a practical case study in Shandong Province demonstrates that compared with the nominal bi-level and robust bi-level models, the proposed optimization model can not only effectively resist parameter uncertainty, but also be less conservative. [Display omitted] • A bi-level GRO model for BCC production planning problem under CEQA mechanism is proposed. • The uncertain carbon emission parameters are characterized by a pair of uncertainty sets. • The established globalized robust counterpart is transformed equivalently into a finite convex system. • The effectiveness of the developed GRO approach is verified via a case study. [ABSTRACT FROM AUTHOR]

Combined heat and power is an inevitable trend in the development of waste-to-power industry. Many waste incineration power generation projects that have already put into operation in China are waiting for transition and upgrading to combined heat and power projects. From a growth option perspective, this paper considers the irreversible process and uncertainty in economic benefits, introduces carbon emission trading mechanism and develops the growth option theory to design the expansion decision making model of waste-to-energy combined heat and power projects, so as to obtain the project value and find the optimal expansion timing. In this paper, a case study is carried out on the expansion decision making of a waste-to-energy combined heat and power project in Shandong Province in China. And two scenarios with specific and flexible expansion times are developed from European and American options separately, as European options require investors to expand at a certain time but American options not. The results indicate that 1) real option approach successfully improves the project value through considering uncertainty, and American option can achieve the optimal expansion time, 2) under the carbon emission trading mechanism, the carbon price affects the expansion index, which has a positive effect on the project value, 3) the linear nature of the income and cost expansion index can help investors make judgments on expansion investments. The effectiveness of the case study implies the practicality of the expansion option method for similar projects to reach dual carbon targets in cost and benefit analysis. • Real option approach is applied in energy transition in WTECHP projects. • European and American options are proposed for certain and flexible decision times. • Expansion time and triggers of WTECHP are incorporated into life cycle management. • CCER is introduced as an environmental element to evaluate expansion decision making. [ABSTRACT FROM AUTHOR]