Two-level rolling horizon optimization to separate investment and operational myopic planning of the energy transition

Myopic decision-making jeopardizes a successful energy transition. Indeed, the operation of energy assets is planned with much shorter foresight than energy investment decisions, which are planned years in advance. These conflicting foresight horizons can lead to a carbon-intensive operation despite accelerating renewable investments. Here, we investigate the diverse impacts of operational and investment myopic foresight on the European energy transition. For this purpose, we present a novel two-level rolling horizon framework, where the investment decisions are optimized on the first level and then passed to the operational optimization on the second level. With the help of the presented optimization framework, we demonstrate that myopic decision-making in operating the energy system can hamper the energy transition, even when the investment decisions are optimized with a long foresight. Furthermore, we analyze how policies can help to respect the long-term climate goals under short-sighted operational decision-making. Specifically, we investigate three archetypal policies: investment targets and bans, operational targets and generation bans, and an annual emission policy. The results show that operational policies can be effective in safeguarding the energy transition against short-term operational decision-making. In contrast, investment policies prove to be ineffective, and thus their real-world impact may be overstated when neglecting myopic operation.