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Regional energy system consists of the three sections heat, electricity and transport. The alternatives of fossil fuels are getting importance in research fields to reduce its adverse effect on the environment, especially in the transport sector. The bioethanol is focusing on recent years to reduce the greenhouse gas (GHG) emission and energy dependence on other countries.

This study focus on analyzing the energy system including the heat and power plant integrating with transportation fuel production with the best utilization of the locally available energy resources. The four regions of vastmanland Vasteras, Koping, Norberg, Skinskatterberg are considered for the energy resources due to its large arable land. The data regarding local energy resources (household waste, peat and wood chips, coal) used in CHP plant are taken from the different bureau and some are assumed as seen in the previous year's trends. The four crops ( winter wheat, spring wheat, spring barley, and oats) are focused for biofuel production in the integrated plant. It is very difficult to predict the crops production and its hectares areas because it is dependent upon the weather conditions. The passenger cars only considered for calculating the biofuel demand in considered regions because data is easily available.

The dynamic model is developed for the optimization of the ethanol plant integrated with CHP plant to reduce the system cost and reduction of the greenhouse gas (GHG) emission.  The mixed integer programming is the best way for system optimization and it developed with the help of the GAMS, which is best suited for complex problems.

 The four case studies are analyzed in which different parameters are changed from 2017 to 2030 years. In the first scenario, all parameters are changed next fourteen years with previous trends. The vehicle's number run on gasoline, straw production hectares area and its production are changed in second, third and fourth scenarios respectively.

 The CHP produce the heat and electricity with local fuels and import fuels which have the cheapest production prices. The fuel E05 and tall oil pitch are also considered to use in the system but due to its heavy prices is not used. The region heat and electricity demand satisfied by importing to the region as compared to produce with some sources are very high prices.  The huge amount of ethanol is produced in each scenario because demand is very little in regions, large amount exported all scenario.  The ethanol import in the last three years of the second scenario because the production of ethanol is less and demand is high. The ethanol demand and production is equal from 3^rd year to 5^th year in the fourth scenario. The exported ethanol l to another region can provide the fuel to more than 500,000 passenger cars in each scenario.

The ethanol utilization in the region can reduce the CO2 emission effectively. The first scenario emitted 120-140Kt CO2 during fourteen years while it reduced to 89 Kt and 77 Kt in the third and fourth scenario. It reduced 36% and 45% CO2 if  10%/year and 50%/years vehicles run by gasoline cars shifted to E85.