Balancing Cost and Emissions in the Russian Electricity Market through Carbon-Aware Dispatch Scenarios

The paper analyzes alternative ways to integrate carbon regulation into electricity markets, using the Russian day-ahead market as a case study. Including CO₂ costs in generators’ marginal bids increases wholesale prices and creates windfall profits for low-carbon generators, shifting the burden to consumers. An alternative nodal approach is proposed, where carbon costs are allocated directly to consumers based on electricity consumption and nodal carbon intensity calculated from power flow tracing. Modeling with a carbon price of 1,000