Decarbonization synergies from joint planning of electricity and hydrogen production: A Texas case study

Hydrogen (H₂) shows promise as an energy carrier in contributing to emissions reductions from sectors which have been difficult to decarbonize, like industry and transportation. At the same time, flexible H₂ production via electrolysis can also support cost-effective integration of high shares of variable renewable energy (VRE) in the power system. In this work, we develop a least-cost investment planning model to co-optimize investments in electricity and H₂ infrastructure to serve electricity and H₂ demands under various low-carbon scenarios. Applying the model to a case study of Texas in 2050, we find that H₂ is produced in approximately equal amounts from electricity and natural gas under the least-cost expansion plan with a CO₂ price of $30–60/tonne. An increasing CO₂ price favors electrolysis, while increasing H₂ demand favors H₂ production from Steam Methane Reforming (SMR) of natural gas. H₂ production is found to be a cost effective solution to reduce emissions in the electric power system as it provides flexibility otherwise provided by natural gas power plants and enables high shares of VRE with less battery storage. Additionally, the availability of flexible electricity demand via electrolysis makes carbon capture and storage (CCS) deployment for SMR cost-effective at lower CO₂ prices ($90/tonne CO₂) than for power generation ($180/tonne CO₂). The total emissions attributable to H₂ production is found to be dependent on the H₂ demand. The marginal emissions from H₂ production increase with the H₂ demand for CO₂ prices less than $90/tonne CO₂, due to shift in supply from electrolysis to SMR. For a CO₂ price of $60/tonne we estimate the production weighted-average H₂ price to be between $1.30–1.66/kg across three H₂ demand scenarios. These findings indicate the importance of joint planning of electricity and H₂ infrastructure for cost-effective energy system decarbonization.     

Baseload electricity from wind via compressed air energy storage (CAES)

This study investigates two methods of transforming intermittent wind electricity into firm baseload capacity: (1) using electricity from natural gas combined-cycle (NGCC) power plants and (2) using electricity from compressed air energy storage (CAES) power plants. The two wind models are compared in terms of capital and electricity costs, CO₂ emissions, and fuel consumption rates. The findings indicate that the combination of wind and NGCC power plants is the lowest-cost method of transforming wind electricity into firm baseload capacity power supply at current natural gas prices (∼$6/GJ). However, the electricity supplied by wind and CAES power plants becomes economically competitive when the cost of natural gas for electric producers is $10.55/GJ or greater. In addition, the Wind-CAES system has the lowest CO₂ emissions (93% and 71% lower than pulverized coal power plants and Wind-NGCC, respectively) and the lowest fuel consumption rates (9 and 4 times lower than pulverized coal power plants and Wind-NGCC, respectively). As such, the large-scale introduction of Wind-CAES systems in the U.S. appears to be the prudent long-term choice once natural gas price volatility, costs, and climate impacts are all considered.     

Co-benefit analysis of incentives for energy generation and storage systems; a multi-stakeholder perspective

In this work, we are analyzing the advantages of energy incentives for all the stakeholders in an energy system. The stakeholders include the government, the energy hub operator, and the energy consumer. Two streams of energy incentives were compared in this work: incentives for renewable energy generation technologies and incentives for energy storage technologies. The first type aims increasing the share of renewable energies in the electricity system while the second type aims development of systems which use clean electricity to replace fossil fuels in other sectors of an energy system such as the transportation, residential and industrial sector. In this work, we are analyzing the advantages of energy incentives for all the stakeholders in an energy system. The stakeholders include the government, the energy hub operator, and the energy consumer. Two streams of energy incentives were compared in this work: incentives for renewable energy generation technologies and incentives for energy storage technologies. The first type aims to increase the share of renewable energies in the electricity system while the second type aims the development of systems which use clean electricity to replace fossil fuels in other sectors of an energy system such as the transportation, residential and industrial sector. The results of the analysis showed that replacing fossil fuel-based electricity generation with wind and solar power is a less expensive way for the energy consumer to reduce GHG emissions (60 and 92 CAD/ tonne CO_2e for wind and solar, respectively) compared to investing on energy storage technologies (225 and 317 CAD/ tonne CO_2e for Power-to-Gas and battery powered forklifts, respectively). However, considering the current Ontario's electricity mix, incentives for the Power-to-Gas and battery powered technologies are less expensive ways to reduce emissions compared to replacing the grid with wind and solar power technologies (1479 and 2418 CAD/ tonne CO_2e for wind and solar, respectively). Our analysis also shows that battery storage and hydrogen storage are complementary technologies for reducing GHG emissions in Ontario.     

Carbon charges and natural gas use in China

Substitution of natural gas for coal in China's power sector could significantly reduce emissions of carbon dioxide, but gas-fired power is generally more costly than coal-fired power in China today. This paper explores how carbon charges and carbon sequestration technology might tip the balance in favour of gas. The costs of electricity from new coal-fired and gas-fired power plants in China are compared under various assumptions about fuel costs, exchange rates, carbon dioxide charges, and application of carbon sequestration technology. Under average cost conditions today, gas-fired power is roughly two-thirds more costly than coal-fired power. But with a charge of $20/tonne of carbon dioxide, the costs of gas- and coal-fired power would typically be about equal. Over the longer term, carbon sequestration technology could be economical with a carbon dioxide charge of $22/tonne or more under typical cost conditions, but gas with sequestration would not have a clear cost advantage over coal with sequestration unless the charge exceeded $35/tonne.     

Economic and environmental competitiveness of high temperature electrolysis for hydrogen production

Alternative hydrogen production technologies are sought in part to reduce the greenhouse gas (GHG) emissions intensity compared with Steam Methane Reforming (SMR), currently the most commonly employed hydrogen production technology globally. This study investigates hydrogen production via High Temperature Steam Electrolysis (HTSE) in terms of GHG emissions and cost of hydrogen production using a combination of Aspen HYSYS® modelling and life cycle assessment. Results show that HTSE yields life cycle GHG emissions from 3 to 20 kg CO_2e/kg H₂ and costs from $2.5 to 5/kg H₂, depending on the system parameters (e.g., energy source). A carbon price of $360/tonne CO_2e is estimated to be required to make HTSE economically competitive with SMR. This is estimated to potentially decrease to $50/tonne CO_2e with future technology advancements (e.g., fuel cell lifetime). The study offers insights for technology developers seeking to improve HTSE, and policy makers for decisions such as considering support for development of hydrogen production technologies.     

Modeling of current and future energyintensity and greenhouse gas emissions ofthe Lebanese industrial sector: assessmentof mitigation options

Greenhouse gas emissions in Lebanon mainly come from energy activities, which are responsible for 85% of all CO₂ emissions. The CO₂ emissions from energy use in manufacturing industries and construction represent 24% of the total emissions of the energy sector. Lebanese manufacturers' accounted for 39.15 million gigajoules of fuel consumption for heat and power generation in 1994, including both fuel used directly and fuel burned remotely to generate electricity used in the sector. In addition to being processed by combustion, CO₂ is generated in calcining of carbonates in the manufacture of cement, iron and glass. Electricity, the most expensive form of energy, represented 25.87% of all fuel used for heat and power. Residual fuel oil and diesel, which are used mainly in direct combustion processes, represent 26.85 and 26.55% of all energy use by industry, respectively. Scenarios for future energy use and CO₂ emissions are developed for the industrial sector in Lebanon. The development of the baseline scenario relied on available data on major plants' outputs, and on reported amounts of fuels used by the industrial sector as a whole. Energy use in industry and the corresponding greenhouse gas (GHG) emissions for Lebanon are projected in baseline scenarios that reflect technologies, activities and practices that are likely to evolve from the base year 1994 to year 2040. Mitigation work targets a 15% of CO₂ emissions from the baseline scenario by year 2005 and a 20–30% reduction of CO₂ emissions by year 2040. The mitigation options selected for analysis are screened on the basis of GHG emissions and expert judgement on the viability of their wide-scale implementation and economic benefits. Using macroeconomic assessment and energy price assumptions, the final estimates of potential GHG emissions and reduction costs of various mitigation scenarios are calculated. The results show that the use of efficient electric motors, efficient boilers and furnaces with fuel switching from fuel oil to natural gas has the largest impact on GHG emissions at a levelized annual cost that ranges from −20 to −5 US$/tonne of CO₂ reduced. The negative costs are indicative of direct savings obtained in energy cost for those mitigation options.     

Environmental impact assessment of green energy systems for power supply of electric vehicle charging station

The Electric Vehicle (EV) as a clean alternative to Classic Vehicle that use fossil fuels is promoted as an immediate solution to improve the quality parameters of the environment related to the transport sector. The transition to clean electrified mobility must be considered from the sustainability spectrum, and the planning of a strategy related to the implementation of electric vehicles implies, from the beginning, providing clean energy conditions to go toward a green-to-green paradigm. It should be noted that the successful implementation of the “green electro mobility” concept depends heavily on the green energy supply solutions of green electric vehicle, so Electric Vehicle Charging Stations (EV-CS) should be powered by electricity generation systems based on green resources. This research article has as main objective the environmental impact assessment from the perspective of CO₂ emissions embedded in green stand-alone energy systems and the estimation of the environmental benefits of their implementation in the power supply of EV-CS from the perspective of avoided CO₂ emissions compared to the classic electricity supply grid. The results indicate that the green energy systems represent feasible solutions for the independent energy support of electric vehicle charging stations, being able to supply electricity based on on-site available 100% alternative energy sources. Related to 1 kWh of electricity, the CO₂ emissions embedded in these systems represent on average 11.40% of the CO₂ emissions of the electricity supplied through the grid at European level and on average 7.10% of the CO₂ emissions of the electricity supplied through the grid worldwide. Results also show that the average price of 1kWh of electricity generated by the analyzed systems is 4.3 times higher than the average unit price of the European Union grid energy, but this indicator must be correlated with the kgCO₂/kWh cost savings compared to the electricity production from classic power plants.     

A liquefied energy chain for transport and utilization of natural gas for power production with CO2 capture and storage – Part 1

A novel transport chain for stranded natural gas utilized for power production with CO₂ capture and storage is developed. It includes an offshore section, a combined gas carrier, and an onshore integrated receiving terminal. Due to utilization of the cold exergy both in the offshore and onshore processes, and combined use of the gas carrier, the transport chain is both energy and cost effective. In this paper, the liquefied energy chain (LEC) is explained, including novel processes for both the offshore field site and onshore market site. In the offshore section, natural gas (NG) is liquefied to LNG by liquid carbon dioxide (LCO₂) and liquid inert nitrogen (LIN), which are used as cold carriers. The LNG is transported in a combined gas carrier to the receiving terminal where it is used as a cooling agent to liquefy CO₂ and nitrogen. The LCO₂ and LIN are transported offshore using the same combined carrier. Pinch and Exergy Analyses are used to determine the optimal offshore and onshore processes and the best transport conditions. The exergy efficiency for a thermodynamically optimized process is 87% and 71% for the offshore and onshore processes, respectively, yielding a total efficiency of 52%. The offshore process is self-supported with power and can operate with few units of rotating equipment and without flammable refrigerants. The loss of natural gas due to power generation for the energy requirements in the LEC processes is roughly one third of the loss in a conventional transport chain for stranded natural gas with CO₂ sequestration. The LEC has several configurations and can be used for small scale (<0.25 MTPA LNG) to large-scale (>5 MTPA LNG) transport. In the example in this paper, the total costs for the simple LEC including transport of natural gas to a 400 MW_net power plant and return of 85% of the corresponding carbon as CO₂ for a total sailing distance of 24 h are 58.1 EUR/tonne LNG excluding or including the cost of power. The total power requirements are 319 kWh/tonne, hence the energy costs are 31.9 EUR/tonne LNG adding up to 90.0 EUR/tonne LNG. The exergy efficiency for this energy chain including power production and CO₂ capture is 46.4% with a total cost of 20.4 EUR/MWh for the produced electricity. The total emissions (in CO₂ equivalents) in the chain are 1–1.5% of the transported CO₂.     

Modeling a clean energy standard for electricity: Policy design implications for emissions,supply, prices,and regions

The electricity sector is responsible for roughly 40% of U.S. carbon dioxide (CO₂) emissions, and a reduction in CO₂ emissions from electricity generation is an important component of the U.S. strategy to reduce greenhouse gas emissions. Toward that goal, several proposals for a clean energy standard (CES) have been put forth, including one espoused by the Obama administration that calls for 80% clean electricity by 2035 phased in from current levels of roughly 40%. This paper looks at the effects of such a policy on CO₂ emissions from the electricity sector, the mix of technologies used to supply electricity, electricity prices, and regional flows of clean energy credits. The CES leads to a 30% reduction in cumulative CO₂ emissions between 2013 and 2035 and results in dramatic reductions in generation from conventional coal. The policy also results in fairly modest increases on national electricity prices, but this masks a wide variety of effects across regions.     

Greenhouse gas emissions reduction by use of wind and solar energies for hydrogen and electricity production: Economic factors

This study addresses economic aspects of introducing renewable technologies in place of fossil fuel ones to mitigate greenhouse gas emissions. Unlike for traditional fossil fuel technologies, greenhouse gas emissions from renewable technologies are associated mainly with plant construction and the magnitudes are significantly lower. The prospects are shown to be good for producing the environmentally clean fuel hydrogen via water electrolysis driven by renewable energy sources. Nonetheless, the cost of wind- and solar-based electricity is still higher than that of electricity generated in a natural gas power plant. With present costs of wind and solar electricity, it is shown that, when electricity from renewable sources replaces electricity from natural gas, the cost of greenhouse gas emissions abatement is about four times less than if hydrogen from renewable sources replaces hydrogen produced from natural gas. When renewable-based hydrogen is used in a fuel cell vehicle instead of gasoline in a IC engine vehicle, the cost of greenhouse gas emissions reduction approaches the same value as for renewable-based electricity only if the fuel cell vehicle efficiency exceeds significantly (i.e., by about two times) that of an internal combustion vehicle. It is also shown that when 6000 wind turbines (Kenetech KVS-33) with a capacity of 350 kW and a capacity factor of 24% replace a 500-MW gas-fired power plant with an efficiency of 40%, annual greenhouse gas emissions are reduced by 2.3 megatons. The incremental additional annual cost is about $280 million (US). The results provide a useful approach to an optimal strategy for greenhouse gas emissions mitigation.     

A liquefied energy chain for transport and utilization of natural gas for power production with CO2 capture and storage – Part 2: The offshore and the onshore processes

A novel energy and cost effective transport chain for stranded natural gas utilized for power production with CO₂ capture and storage is developed. It includes an offshore section, a combined gas carrier, and an integrated receiving terminal. In the offshore process, natural gas (NG) is liquefied to LNG by liquid carbon dioxide (LCO₂) and liquid inert nitrogen (LIN), which are used as cold carriers. The offshore process is self-supported with power, hot and cold utilities and can operate with little rotating equipment and without flammable refrigerants. In the onshore process, the cryogenic exergy in LNG is used to cool and liquefy the cold carriers, which reduces the power requirement to 319 kWh/tonne LNG. Pinch and exergy analyses are used to determine thermodynamically optimized offshore and onshore processes with exergy efficiencies of 87% and 71%, respectively. There are very low emissions from the processes. The estimated specific costs for the offshore and onshore process are 8.0 and 14.6 EUR per tonne LNG, respectively, excluding energy costs. With an electricity price of 100 EUR per MWh, the specific cost of energy in the onshore process is 31.9 EUR per tonne LNG.     

Five-year technology selection optimization to achieve specific CO2 emission reduction targets

Long-term planning for replacement of fossil fuel energy technologies with renewables is of great importance for achieving GHG emission reduction targets. The current study is focused on developing a five-year mathematical model for finding the optimal sizing of renewable energy technologies for achieving certain CO₂ emission reduction targets. A manufacturing industrial facility which uses CHP for electricity generation and natural gas for heating is considered as the base case in this work. Different renewable energy technologies are developed each year to achieve a 4.53% annual CO₂ emission reduction target. The results of this study show that wind power is the most cost-effective technology for reducing emissions in the first and second year with a cost of 44 and 69 CAD per tonne of CO₂, respectively. Hydrogen, on the other hand, is more cost-effective than wind power in reducing CO₂ emissions from the third year on. The cost of CO₂ emission reduction with hydrogen doesn't change drastically from the first year to the fifth year (107 and 130 CAD per tonne of CO₂). Solar power is a more expensive technology than wind power for reducing CO₂ emissions in all years due to lower capacity factor (in Ontario), more intermittency (requiring mores storage capacity), and higher investment cost. A hybrid wind/battery/hydrogen energy system has the lowest emission reduction cost over five years. The emission reduction cost of such hybrid system increases from 44 CAD per tonne of CO₂ in the first year to 156 CAD per tonne of CO₂ in the fifth year. The developed model can be used for long-term planning of energy systems for achieving GHG emission targets in a regions/country which has fossil fuel-based electricity and heat generation infrastructure.     

Lower electricity prices and greenhouse gas emissions due to rooftop solar: empirical results for Massachusetts

Monthly and hourly correlations among photovoltaic (PV) capacity utilization, electricity prices, electricity consumption, and the thermal efficiency of power plants in Massachusetts reduce electricity prices and carbon emissions beyond average calculations. PV utilization rates are highest when the thermal efficiencies of natural gas fired power plants are lowest, which reduces emissions of CO₂ and CH₄ by 0.3% relative to the annual average emission rate. There is a positive correlation between PV utilization rates and electricity prices, which raises the implied price of PV electricity by up to 10% relative to the annual average price, such that the average MWh reduces electricity prices by $0.26–$1.86 per MWh. These price reductions save Massachusetts rate-payers $184 million between 2010 and 2012. The current and net present values of these savings are greater than the cost of solar renewable energy credits which is the policy instrument that is used to accelerate the installation of PV capacity. Together, these results suggest that rooftop PV is an economically viable source of power in Massachusetts even though it has not reached socket parity.     

Potential of renewable surplus electricity for power-to-gas and geo-methanation in Switzerland

Energy systems are increasingly exposed to variable surplus electricity from renewable sources, particularly photovoltaics. This study estimates the potential to use surplus electricity for power-to-gas with geo-methanation for Switzerland by integrated energy system and power-to-gas modelling. Various CO₂ point sources are assessed concerning exploitable emissions for power-to-gas, which were found to be abundantly available such that 60 TWh surplus electricity could be converted to methane, which is the equivalent of the current annual Swiss natural gas demand. However, the maximum available surplus electricity is only 19 TWh even in a scenario with high photovoltaic expansion. Moreover, making this surplus electricity available for power-to-gas requires an ideal load shifting capacity of up to 10 times the currently installed pumped-hydro capacity. Considering also geological and economic boundary conditions for geo-methanation at run-of-river and municipal waste incinerator sites with nearby CO₂ sources reduces the exploitable surplus electricity from 19 to 2 TWh.     

Energy efficiency measures and conversion of fossil fuel boiler systems in a detached house

There is a large potential to reduce primary energy use and CO₂ emissions from the Swedish building stock. Here detached houses heated by oil, natural gas or electric boilers were assessed. CO₂ emissions, primary energy use and heating costs were evaluated before and after implementing house envelope measures, conversions to more efficient heating systems and changes to biomass fuel use. The study included full energy chains, from natural resources to usable heat in the houses. The aim was to evaluate the societal economic cost effectiveness of reducing CO₂ emission and primary energy use by different combinations of changes. The results demonstrated that for a house using an electric boiler, a conversion to a heat pump combined with house envelope measures could be cost efficient from a societal economic perspective. If the electricity was based on biomass, the primary energy use was at the same time reduced by 70% and the CO₂ emission by 97%. Large emission reductions were also seen for conversions from oil and gas boilers to a biomass-based system. However, for these conversions the heating cost increased, leading to a mitigation cost of around €50/tonne C avoided. The price of oil and natural gas greatly influenced the competitiveness of the alternatives. House envelope measures were more cost-effective for houses with electric boilers as the cost of energy for this system is high. The results are specific to a Swedish context, but also give an indication of the potential in other regions, such as northern European and large parts of North America, which have both a cold climate and a widespread use of domestic boilers.     

Assessment of demand for natural gas from the electricity sector in India

Electricity sector is among the key users of natural gas. The sustained electricity deficit and environment policies have added to an already rising demand for gas. This paper tries to understand gas demand in future from electricity sector. This paper models the future demand for gas in India from the electricity sector under alternative scenarios for the period 2005–2025, using bottom-up ANSWER MARKAL model. The scenarios are differentiated by alternate economic growth projections and policies related to coal reforms, infrastructure choices and local environment. The results across scenarios show that gas competes with coal as a base-load option if price difference is below US $ 4 per MBtu. At higher price difference gas penetrates only the peak power market. Gas demand is lower in the high economic growth scenario, since electricity sector is more flexible in substitution of primary energy. Gas demand reduces also in cases when coal supply curve shifts rightwards such as under coal reforms and coal-by-wire scenarios. Local environmental (SO₂ emissions) control promotes end of pipe solutions flue gas de-sulfurisation (FGD) initially, though in the longer term mitigation happens by fuel substitution (coal by gas) and introduction of clean coal technologies integrated gasification combined cycle (IGCC).     

Co-production of hydrogen,electricity and CO2 from coal with commercially ready technology. Part B: Economic analysis

This two-part paper investigates performances, costs and prospects of using commercially ready technology to convert coal to H₂ and electricity, with CO₂ capture and storage. Part A focuses on plant configuration, performance, and CO₂ emissions. Part B focuses on the cost of producing H₂ and electricity, with and without reduced CO₂ emissions. Our estimates show that the costs for $\sim$ 91% decarbonized energy (via quench gasification at 70 bar) are about $6.2¢/\mathrm{kWh}$ for electricity and about $ 1.0/kg (8.5  $/GJ, LHV) for hydrogen; these are, respectively, 35% and 19% higher than the corresponding energy costs with CO₂ venting. Referenced to these analogous CO₂ venting plants, the costs of CO₂ emissions avoided are $\sim$ 24 $/tonne for electricity and 11 $/tonne for H₂.     

Analysis of CO2 emissions reduction potential in secondary production and semi-fabrication of non-ferrous metals

Industrial sector growth in developing countries requires the provision of alternatives to guarantee sustainable development. Improving energy efficiency and fuel switching are two measures to reduce CO₂ emissions in the industrial sector, with natural gas and low-carbon electricity as the most feasible options in the short term. In this work, a linear programming optimization model has been developed to study the potential of energy efficiency improvement and fuel substitution for CO₂ emissions reduction, at national level in the non-ferrous metals industry. The energy resource/end-use device allocation problem in secondary metal production and semi-fabrication has been modeled. Using this model, the particular case of Colombia, where low-carbon electricity is available, has been studied. By improving energy efficiency, energy use and CO₂ emissions can be reduced significantly, 73% and 72%, respectively, at negative costs. Further CO₂ emissions reductions, up to 88%, are possible with fuel switching to low-carbon electricity, increasing the costs for the energy system; however, cost reductions caused by energy efficiency improvement outweigh cost increments of fuel switching. Benefits achieved with fuel substitution using low-carbon electricity can be lost if hydropower is not available; in such a case, efficient natural gas-fired end-use devices are preferable.     

Techno-economic analysis of adiabatic four-stage CO2 methanation process for optimization and evaluation of power-to-gas technology

Owing to increasing demands for clean energy, caused by global warming, renewable energy sources have attracted significant attention. However, these sources can affect the reliability of electrical grids owing to their intermittency. Power-to-gas technology is expected to help address this issue. In this study, the CO₂ methanation process, which yields synthetic natural gas (SNG) via the synthesis of CO₂ and H₂ through proton exchange membrane (PEM) water electrolysis using surplus electricity generated from renewable energy, was evaluated and optimized based on techno-economic analyses. Requirements for the introduction of SNG produced through CO₂ methanation in domestic natural gas markets are presented by considering various scenarios. Results indicate that, even if the electricity costs, including system marginal price and renewable energy costs, are minimal, the costs for PEM water electrolysis and CO₂ methanation must be reduced by ~$550/kW and 25%, respectively, relative to current levels for the viable introduction of SNG in domestic markets.     

The role of policy instruments for promoting combined heat and power production with low CO2 emissions in district heating systems

Policy instruments clearly influence the choice of production technologies and fuels in large energy systems, including district heating networks. Current Swedish policy instruments aim at promoting the use of biofuel in district heating systems, and at promoting electric power generation from renewable energy sources. However, there is increasing pressure to harmonize energy policy instruments within the EU. In addition, natural gas based combined cycle technology has emerged as the technology of choice in the power generation sector in the EU. This study aims at exploring the role of policy instruments for promoting the use of low CO₂ emissions fuels in high performance combined heat and power systems in the district heating sector. The paper presents the results of a case study for a Swedish district heating network where new large size natural gas combined cycle (NGCC) combined heat and power (CHP) is being built. Given the aim of current Swedish energy policy, it is assumed that it could be of interest in the future to integrate a biofuel gasifier to the CHP plant and co‐fire the gasified biofuel in the gas turbine unit, thereby reducing usage of fossil fuel. The goals of the study are to evaluate which policy instruments promote construction of the planned NGCC CHP unit, the technical performance of an integrated biofuelled pressurized gasifier with or without dryer on plant site, and which combination of policy instruments promote integration of a biofuel gasifier to the planned CHP unit. The power plant simulation program GateCycle was used for plant performance evaluation. The results show that current Swedish energy policy instruments favour investing in the NGCC CHP unit. The corresponding cost of electricity (COE) from the NGCC CHP unit is estimated at 253 SEK MWh^?1, which is lower than the reference power price of 284 SEK MWh^?1. Investing in the NGCC CHP unit is also shown to be attractive if a CO₂ trading system is implemented. If the value of tradable emission permits (TEP) in such as system is 250 SEK tonne^?1, COE is 353 SEK MWh^?1 compared to the reference power price of 384 SEK MWh^?1. It is possible to integrate a pressurized biofuel gasifier to the NGCC CHP plant without any major re‐design of the combined cycle provided that the maximum degree of co‐firing is limited to 27–38% (energy basis) product gas, depending on the design of the gasifier system. There are many parameters that affect the economic performance of an integrated biofuel gasifier for product gas co‐firing of a NGCC CHP plant. The premium value of the co‐generated renewable electricity and the value of TEPs are very important parameters. Assuming a future CO₂ trading system with a TEP value of 250 SEK tonne^?1 and a premium value of renewable electricity of 200 SEK MWh^?1 COE from a CHP plant with an integrated biofuelled gasifier could be 336 SEK MWh^?1, which is lower than both the reference market electric power price and COE for the plant operating on natural gas alone. Copyright © 2005 John Wiley & Sons, Ltd.