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Renewable energy sources are likely to play a major role in meeting the future energy requirement of a developing country like India. Among the various renewable energy sources, the bio‐energy plays a key role for the power generation. In this paper, an attempt is made to develop a fuzzy based linear programming optimal electricity allocation model (OEAM) that minimizes the cost and determines the optimum allocation of different energy sources for the centralized and decentralized power generation in India with special emphasis to bio‐energy.

The OEAM model optimizes and selects the appropriate energy options for the power generation on the factors such as cost, potential, demand, efficiency, emission and carbon tax. The objective function of the model is minimizing the cost of power generation. The other factors are used as constraints in the model. The fuzzy linear programming optimization approach is used in the model.

The extents of energy sources distribution for the power generation in the year 2020 would be 15,800 GWh (4 per cent) from the coal based plants, 85,400 GWh (20 per cent) from the nuclear plants, 191,100 GWh (44 per cent) from the hydro plants, 22,400 GWh (5 per cent) from the wind mills, 45,520 GWh (11 per cent) from the biomass gasifier plants, 14,112 GWh (3 per cent) from the biogas plants, 8,400 GWh (2 per cent) from the solid waste, 33,600 GWh (8 per cent) from the cogeneration plants and 11,970 GWh (3 per cent) from the mini hydel plants, respectively.

The OEAM has been developed for the electricity demand allocation for the year 2020. An extensive literature survey revealed that carbon tax and emission constraints were never used in the previous models and they are considered in the present model.