In this paper, a new optimization framework is developed for optimal planning of low‐carbon microgrids for clean city applications. It models the effect of recent carbon policies imposed by the environmental protection agencies on the power distribution utilities especially, in urban areas. To mimic the various techno‐ economic and social aspects of emerging dispatchable distributed generation technologies in the proposed framework, a new objective function is introduced. The moth search optimization technique is adopted to solve the problem aiming to determine the optimal mix of energy generation. Different scenarios are framed and investigated on a benchmark test distribution system of 33 buses. The simulation results are found to be inspiring in quantifying the optimal carbon cap/tax, whilst improving the system performance.
Keywords Carbon tax, dispatchable generation, distributed energy resources, carbon emission reduction, green city, optimization