Hi, Anastasios -
Thanks for providing a copy of your model. I looked through it and found the source of the excessive production. The root cause is an issue with how LEAP writes inputs for optimization when an optimized module has multiple output fuels. This is the case in your model - your optimized module's output fuels include both electricity and heat. The issue occurs when using NEMO and OSeMOSYS, as you reported.
We are working on correcting it and should have a fix in an upcoming release of LEAP. In the meantime, you can work around the issue by converting heat to a module co-product rather than a regular output fuel. To do this, delete the output fuel for heat, specify heat as the co-product in the optimized module's properties (see the screenshot below), and populate the new Coproduct Efficiency variable for the module's processes.
Although I'm characterizing this approach as a work-around, I think it's preferable from a conceptual standpoint as well as on practical grounds. Right now, your model assumes that any process in the optimized module can produce heat, including non-thermal processes such as hydro and solar PV. With Coproduct Efficiency, you can instead control which processes generate heat and how much they produce relative to their electricity output.
I hope this is helpful. Thanks for finding this issue for us!
Regards,
Jason