COVID-19: Government subsidy models for sustainable energy supply with disruption risks

Yu-Chung Tsao; Vo-Van Thanh; Yi-Ying Chang; Hsi-Hsien Wei

doi:10.1016/j.rser.2021.111425

COVID-19: Government subsidy models for sustainable energy supply with disruption risks

Renew Sustain Energy Rev. 2021 Oct:150:111425. doi: 10.1016/j.rser.2021.111425. Epub 2021 Jul 6.

Authors

Yu-Chung Tsao^{1

2

3

4}, Vo-Van Thanh^{1

2}, Yi-Ying Chang⁵, Hsi-Hsien Wei⁶

Affiliations

¹ Department of Industrial Management, National Taiwan University of Science and Technology, Taipei, Taiwan.
² Artificial Intelligence for Operations Management Research Center, National Taiwan University of Science and Technology, Taipei, Taiwan.
³ Department of Business Administration, Asia University, Taichung, Taiwan.
⁴ Department of Medical Research, China Medical University Hospital, China Medical University, Taichung, Taiwan.
⁵ Department of Business Administration, National Taiwan University of Science and Technology, Taipei, Taiwan.
⁶ Department of Building and Real Estate, The Hong Kong Polytechnic University, Hong Kong.

Abstract

The outbreak of the COVID-19 pandemic poses great challenges to the current government subsidy models in the renewable energy sector for recovering in the post-pandemic economy. Although, many subsidy models have been applied to accelerate renewable energy investment decisions. However, it is important to develop a new model to ensure the sustainability of the renewable energy supply network under disruptions on both the supply and demand sides due to hazardous events. This study investigates different subsidy models (renewable credit, supplier subsidy, and retailer subsidy) to find a win-win subsidy model for sustainable energy supply under disruption risks. The objective is to determine the optimal capacity of renewable energy added to the grid, the optimal wholesale price of the power plant, and the optimal retail price of the aggregator under different subsidy models to maximize the economic, social, and environmental benefits of the whole network. A novel scenario-based robust fuzzy optimization approach is proposed to capture the uncertainties of business-as-usual operations (e.g., some relevant costs and demand) and hazardous events (e.g., COVID-19 pandemic). The proposed model is tested in a case study of the Vietnamese energy market. The results show that for a high negative impact level of hazardous events on the supply side, the renewable credit and supplier subsidy models should be considered to recovery the renewable energy market. Further, the proposed approach has a better performance in improving the power plant's robust profit for most of the hazard scenarios than the robust optimization model.

Keywords: COVID-19; Government subsidy; Hazardous scenario; Renewable energy; Robust fuzzy model; Sustainable supply.