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External costs of power plants in Poland Mariusz KUDELKO Wojciech SUWALA Jacek KAMINSKI Mineral and Energy Economy Research Institute Krakow, Poland.

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Presentation on theme: "External costs of power plants in Poland Mariusz KUDELKO Wojciech SUWALA Jacek KAMINSKI Mineral and Energy Economy Research Institute Krakow, Poland."— Presentation transcript:

1 External costs of power plants in Poland Mariusz KUDELKO Wojciech SUWALA Jacek KAMINSKI Mineral and Energy Economy Research Institute Krakow, Poland

2 Polish energy sector – energy production 1.97% of electricity produced from fossil fuels 2.Domestic sources of primary energy dominate the total supply 3.All consumed oil and half of natural gas are imported 4.Hard coal and lignite are the main primary energy sources 5.Renewables still have a small share in the energy balance

3 Polish energy sector – structure 1.Electricity generation sector consists of about 15 large public power plants and 30 public CHP plants 2.District heat sector is more decentralized and is characterized by companies owned by local authorities 3.Coal mining sector is organized in four hard coal companies (42 mines) and 5 lignite mines

4 Polish energy sector – emissions 1.The highest reduction of SO2 in the energy sector is due to FGD investments progress 2.The level of NOx emissions from the energy sector is stabilized owing to the technological constrains 3.Decrease of TSP emissions is caused by the relatively low cost of equipment applied within the industry SO2 NOx PM

5 Polish energy sector – CO2 emissions 1.Kyoto target = 94% of 1988 level 2.CO 2 emissions stabilized in the mid nineties at the level of Mtons in total 3.The energy sector, which is the main consumer of solid fuels, is responsible for 56% of CO 2 emissions

6 Plant characteristics

7 Location of selected power plants Gdansk Warszawa Katowice Lodz Poznan Czech Republic Germany Ukraine Slovakia Belarus Russia CHP Ostroleka Lignite PP Belchatow PP Lagisza PP Dolna Odra CHP Siekierki Lignite PP Patnow Lignite PP Adamow PP Polaniec PP Kozienice Total number: hard coal-65 lignite- 5

8 Energy production, 2002, GWh Gdansk Warszawa Katowice Lodz Poznan Czech Republic Germany Ukraine Slovakia Belarus Russia CHP Ostroleka Lignite PP Belchatow PP Lagisza PP Dolna Odra CHP Siekierki Lignite PP Patnow Lignite PP Adamow PP Polaniec PP Kozienice Total energy production, TWh: hard coal-83 lignite-50

9 SO2 emissions, 2002, mg/Nm 3 Gdansk Warszawa Katowice Lodz Poznan Czech Republic Germany Ukraine Slovakia Belarus Russia CHP Ostroleka Lignite PP Belchatow PP Lagisza PP Dolna Odra CHP Siekierki Lignite PP Patnow Lignite PP Adamow PP Polaniec PP Kozienice Total emissions, 000 t: SO2-780 NOX-242 PM10- 58

10 Stack height, m Gdansk Warszawa Katowice Lodz Poznan Czech Republic Germany Ukraine Slovakia Belarus Russia CHP Ostroleka Lignite PP Belchatow PP Lagisza PP Dolna Odra CHP Siekierki Lignite PP Patnow Lignite PP Adamow PP Polaniec PP Kozienice Typical stack height, m: hard coal-120 lignite-160

11 Results (EcoSense 2.0)

12 average hard coal power plant (mid value) = 2,48 average lignite power plant (mid value) = 3,56

13 Results (EcoSense 2.0) average SO2 (mid value) = 3942 average NOx (mid value) = 1206 average PM10 (mid value) = 5685

14 Results (EcoSense 2.0) Total external costs of power plants

15 Gdansk Warszawa Katowice Lodz Poznan Czech Republic Germany Ukraine Slovakia Belarus Russia CHP Ostroleka Lignite PP Belchatow PP Lagisza PP Dolna Odra CHP Siekierki Lignite PP Adamow PP Polaniec PP Kozienice 2,68 3,19 6,19 3,08 2,44 2,70 2, ,00 3,58 3,48 9,43 4,38 Lignite PP Patnow 4,52 3,41 4,68 4,45 2,50 v. 2.0v. 4.0 Results, external costs, Euro cents/kWh

16 Results

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21 National, as% of total costs Poznan Czech Republic Germany Ukraine Slovakia Belarus Russia CHP Ostroleka Lignite PP Belchatow PP Lagisza PP Dolna Odra CHP Siekierki Lignite PP Patnow Lignite PP Adamow PP Polaniec PP Kozienice 39% 34% 45% 47% 50% 48% 49% 35% Total external costs, mln Euro: All countries5892 Poland2546 (43%)

22 The model of power sector development Key issues: 1.A mid-term planning of development of the Polish energy system based on the criterion of effective allocation of resources 2.External costs of emissions from energy technologies internalised

23 Criteria of resources allocation 1.Cost-effective allocation, which means a cost minimization for objective function to achieve a specific environmental objective – the desired emissions level 2.Maximization of social welfare defined as a sum of producers and consumers surplus minus external costs

24 Main assumptions Supply side: public power plants, public CHP plants, industry CHP plants and municipal heat plants aggregated as energy generation technologies divided into three groups: existing, modernized and new plants 2.Demand side: industry and construction, transport, agriculture, trade and services, individual consumers and export

25 Main assumptions Demand curves estimated by price and income elasticity coefficients, both for electricity and heat markets 4.Damages related to energy technologies and derived from the ExternE estimations 5.Implementation – GAMS package, solvers – CPLEX and CONOPT

26 General structure of the model

27 Type of fuel. Source of supply Capacity of supply Domestic Import Existing technologies Technology efficiency Fuel consump. rate Load periods Electricity/heat ratio Transport losses Demand sectors Demands ratio in load periods Balance of fuels supplies Energy balance of production Balance of production and demand for final energy Fuels supplies Energy production Consumers demand Energy price Demand functions Price elasticity Income elasticity Balance of production capacity Balance of production investments Capacity Production investments Availability factor Technology efficiency Balance of abatement capacity Balance of environ. investments Capacity Environ. investments Abatement technologies Balance of emissions Emissions reduction Emissions Balance of emissions reduction Efficiency of abatement technologies Emissions factor Unit external costs Balances Variables Parameters Costs component Legend: Modernization of technologies New technologies Import Export Fuel costs Investment costs of technol. prod. Fixed and variable costs of technol. prod. Investment costs of abatement technol. Fixed and variable costs of abatement technol. Private costs Balance of Import and export costs External costs Consumers and producers surplus Social welfare

28 Scenarios

29 Results, variant 1

30 Results, variant 2, scenario 3

31 Results, private and social welfare Variants Variant 1 Variant 2 scenario 1 scenario 2 scenario 3 Consumers surplus Producers surplus Private costs External costs, including: SO NO X CO TSP Private welfare Social welfare Consumers surplus Producers surplus Private costs External costs, including: SO NO X CO TSP Private welfare Social welfare bln zl %

32 Conclusions The structure of energy production in the cost-effective allocation scenario is dominated by the low-cost energy conversion technologies that are generally based on solid fuels – hard coal and lignite 2.In the partial equilibrium model with external costs internalised the dominant position of solid fuels decreases in favour of gas and renewables

33 Conclusions Projected long-term increase of energy prices amounts to about 100% comparing with their present level. Decrease of energy production is predicted on 20-30% of the total 4.Existing abatement technologies are economically efficient strategies to lower emissions 5.From a social point of view a full internalisation of external costs by the energy price implies that this scenario is the most advantageous


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