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External costs of power plants in Poland. Mariusz KUDE L KO Wojciech SUWALA Jacek KAMINSKI Mineral and Energy Economy Research Institute Krakow, Poland. Polish energy sector – energy production. 97% of electricity produced from fossil fuels

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external costs of power plants in poland

External costs of power plants in Poland

Mariusz KUDELKO

Wojciech SUWALA

Jacek KAMINSKI

Mineral and Energy Economy Research Institute

Krakow, Poland

slide2

Polish energy sector – energy production

  • 97% of electricity produced from fossil fuels
  • Domestic sources of primary energy dominate the total supply
  • All consumed oil and half of natural gas are imported
  • Hard coal and lignite arethe main primary energy sources
  • Renewables still have a small share in the energy balance
slide3

Polish energy sector – structure

  • Electricity generation sector consists of about 15 large public power plants and 30 public CHP plants
  • District heat sector is more decentralized and is characterized by companies owned by local authorities
  • Coal mining sector is organized in four hard coal companies (42 mines) and 5 lignite mines
slide4

Polish energy sector – emissions

  • The highest reduction of SO2in the energy sector is due to FGD investments progress
  • The level of NOx emissions from the energy sector is stabilized owing to the technological constrains
  • Decrease ofTSP emissions is caused by the relatively low cost of equipment applied within the industry

SO2

NOx

PM

slide5

Polish energy sector – CO2 emissions

  • Kyoto target = 94% of 1988 level
  • CO2 emissions stabilized in the mid nineties at the level of 360-370 Mtons in total
  • The energy sector, which is the main consumer of solid fuels, is responsible for 56% of CO2 emissions
location of selected power plants
Location of selected power plants

Russia

Gdansk

Belarus

PP Dolna Odra

CHP Ostroleka

Germany

Lignite PP Patnow

Warszawa

Poznan

Lodz

CHP Siekierki

Lignite PP Adamow

Lignite PP Belchatow

Ukraine

PP Kozienice

PP Lagisza

Katowice

PP Polaniec

Total number:

hard coal - 65

lignite - 5

Czech Republic

Slovakia

energy production 2002 gwh
Energy production, 2002, GWh

Russia

Gdansk

Belarus

4524

PP Dolna Odra

1805

CHP Ostroleka

Lignite PP Patnow

Germany

5982

Warszawa

Poznan

3999

3311

Lodz

CHP Siekierki

25422

Lignite PP Adamow

Lignite PP Belchatow

8327

Ukraine

PP Kozienice

2810

6278

PP Lagisza

Katowice

Total energy production, TWh:

hard coal - 83

lignite - 50

PP Polaniec

Czech Republic

Slovakia

so2 emissions 2002 mg nm 3
SO2 emissions, 2002, mg/Nm3

Russia

Gdansk

Belarus

1239

PP Dolna Odra

2130

CHP Ostroleka

Lignite PP Patnow

3211

Germany

Warszawa

Poznan

1425

916

Lodz

CHP Siekierki

Lignite PP Adamow

1777

Lignite PP Belchatow

Ukraine

1884

PP Kozienice

1245

PP Lagisza

Katowice

1551

Total emissions, 000 t:

SO2 - 780

NOX - 242

PM10 - 58

PP Polaniec

Czech Republic

Slovakia

stack height m
Stack height, m

Russia

Gdansk

200

Belarus

PP Dolna Odra

120

150

CHP Ostroleka

Lignite PP Patnow

Germany

Warszawa

Poznan

150

200

300

Lodz

CHP Siekierki

Lignite PP Adamow

Lignite PP Belchatow

200

Ukraine

180

PP Kozienice

250

PP Lagisza

Katowice

PP Polaniec

Typical stack height, m:

hard coal - 120

lignite - 160

Czech Republic

Slovakia

slide12

Results (EcoSense 2.0)

average lignite power plant (mid value) = 3,56

average hard coal power plant (mid value) = 2,48

slide13

Results (EcoSense 2.0)

average NOx (mid value) = 1206

average SO2 (mid value) = 3942

average PM10 (mid value) = 5685

slide14

Results (EcoSense 2.0)

Total external costs of power plants

slide15

Results, external costs, Euro cents/kWh

6,19

9,43

3,58

4,68

Russia

2,68

Gdansk

3,00

3,41

Belarus

3,48

4,38

PP Dolna Odra

2,44

1.88

CHP Ostroleka

3,08

Germany

Warszawa

Lignite PP Patnow

Poznan

CHP Siekierki

Lodz

2,50

2,19

4,45

Lignite PP Adamow

Lignite PP Belchatow

Ukraine

2,70

3,19

4,52

PP Kozienice

PP Lagisza

Katowice

PP Polaniec

Czech Republic

v. 2.0

v. 4.0

Slovakia

national as of total costs
National, as% of total costs

Russia

45%

Belarus

PP Dolna Odra

34%

50%

CHP Ostroleka

Lignite PP Patnow

48%

49%

Poznan

Germany

CHP Siekierki

45%

Lignite PP Belchatow

Lignite PP Adamow

39%

Ukraine

47%

PP Kozienice

PP Lagisza

35%

PP Polaniec

Czech Republic

Total external costs, mln Euro:

All countries 5892

Poland 2546 (43%)

Slovakia

slide22

The model of power sector development

Key issues:

A mid-term planning of development of the Polish energy system based on the criterion of effective allocation of resources

External costs of emissions from energy technologies internalised

slide23

Criteria of resources allocation

  • Cost-effective allocation, which means a cost minimization for objective function to achieve a specific environmental objective – the desired emissions level
  • Maximization of social welfare defined as a sum of producers’ and consumers’ surplus minus external costs
slide24

Main assumptions - 1

  • 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
  • Demand side:industry and construction, transport, agriculture, trade and services, individual consumers and export
slide25

Main assumptions - 2

  • Demand curves estimated by price and income elasticity coefficients, both for electricity and heat markets
  • Damages related to energy technologies and derived from the ExternE estimations
  • Implementation – GAMS package, solvers – CPLEX and CONOPT
slide27

Private costs

Social welfare

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.

Balance of Import and export costs

External costs

Consumers and producers surplus

Type of fuel.

Source of supply

Technology efficiency

Fuel consump. rate

Demand sectors

Load periods

Domestic

Import

Capacity of supply

Existing technologies

Electricity/heat ratio

Transport losses

Demands ratio in load periods

Balance of production and demand for final energy

Fuels supplies

Energy production

Consumers demand

Energy balance of production

Balance of fuels supplies

Modernization of technologies

Energy price

Import

Production investments

Balance of production investments

Balance of production capacity

Capacity

New technologies

Availability factor

Technology efficiency

Demand functions

Export

Balance of environ. investments

Balance of abatement capacity

Emissions factor

Price elasticity

Income elasticity

Environ. investments

Capacity

Abatement technologies

Balance of emissions

Emissions reduction

Emissions

Balance of emissions reduction

Unit external costs

Legend:

Costs component

Balances

Parameters

Variables

Efficiency of abatement technologies

slide31

Results, private and social welfare

bln zl

Variants

Variant 1

Variant 2

scenario 1

scenario 2

scenario 3

Consumers’ surplus

-

547

478

442

Producers’ surplus

-

109

121

134

Private costs

358

311

318

325

External costs, including:

265

285

139

114

SO

97

115

44

37

2

NO

33

33

15

12

X

CO

63

64

54

48

2

TSP

72

73

26

17

Private welfare

-

656

599

576

Social welfare

-

37

1

46

0

462

%

Consumers’ surplus

-

0

-

13

-

19

Producers’ surplus

-

0

11

23

Private costs

-

0

2

5

External costs, including:

-

0

-

51

-

60

SO

-

0

-

62

-

68

2

NO

-

0

-

55

-

64

X

CO

-

0

-

16

-

25

2

TSP

-

0

-

64

-

77

Private welfa

re

-

0

-

9

-

12

Social welfare

-

0

24

25

slide32

Conclusions - 1

  • 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
  • In the partial equilibrium model with external costs internalised the dominant position of solid fuels decreases in favour of gas and renewables
slide33

Conclusions - 2

  • 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
  • Existing abatement technologies are economically efficient strategies to lower emissions
  • From a social point of view a full internalisation of external costs by the energy price implies that this scenario is the most advantageous