Internalisation of external cost in the power generation sector: Analysis with Global Multi-regional MARKAL model

The Global MARKAL-Model (GMM), a multi-regional “bottom-up” partial equilibrium model of the global energy system with endogenous technological learning, is used to address impacts of internalisation of external costs from power production. This modelling approach imposes additional charges on electricity generation, which reflect the costs of environmental and health damages from local pollutants (SO₂, NO_x) and climate change, wastes, occupational health, risk of accidents, noise and other burdens. Technologies allowing abatement of pollutants emitted from power plants are rapidly introduced into the energy system, for example, desulphurisation, NO_x removal, and CO₂ scrubbers. The modelling results indicate substantial changes in the electricity production system in favour of natural gas combined cycle, nuclear power and renewables induced by internalisation of external costs and also efficiency loss due to the use of scrubbers. Structural changes and fuel switching in the electricity sector result in significant reduction of emissions of both local pollution and CO₂ over the modelled time period. Strong decarbonisation impact of internalising local externalities suggests that ancillary benefits can be expected from policies directly addressing other issues then CO₂ mitigation. Finally, the detailed analysis of the total generation cost of different technologies points out that inclusion of external cost in the price of electricity increases competitiveness of non-fossil generation sources and fossil power plants with emission control.     

The potential impacts of climate-change policy on freshwater use in thermoelectric power generation

Climate change policy involving a price on carbon would change the mix of power plants and the amount of water they withdraw and consume to generate electricity. We analyze what these changes could entail for electricity generation in the United States under four climate policy scenarios that involve different costs for emitting CO₂ and different technology options for reducing emissions out to the year 2030. The potential impacts of the scenarios on the U.S. electric system are modeled using a modified version of the U.S. National Energy Modeling System and water-use factors for thermoelectric power plants derived from electric utility data compiled by the U.S. Energy Information Administration. Under all the climate-policy scenarios, freshwater withdrawals decline 2–14% relative to a business-as-usual (BAU) scenario of no U.S. climate policy. Furthermore, water use decreases as the price on CO₂ under the climate policies increases. At relatively high carbon prices (>$50/tonne CO₂), however, retrofitting coal plants to capture CO₂ increases freshwater consumption compared to BAU in 2030. Our analysis suggests that climate policies and a carbon price will reduce both electricity generation and freshwater withdrawals compared to BAU unless a substantial number of coal plants are retrofitted to capture CO₂.     

Estimating the health damage costs of syrian electricity generation system using impact pathway approach

Based on the simplified impact pathway approach the environmental impacts from airborne pollutant emissions of Syrian electricity generation system have been assessed and the associated external damage costs to human health have been evaluated. The obtained results indicate that the environmental impacts can add considerable external cost to the typical generation cost. The estimated externalities vary between 2.5 and 0.07 US-cents per generated kWh for heavy fuel oil and NG fired power plants respectively. For the fuel oil fired power plants the resulting external cost, arise mainly from Sulphates impact, amounts to about 25% of the present generation costs. These results indicate the advantage of NG fired power plants as clean generation technology and the necessity of supplying oil fired power plants with SO₂ emission reduction technologies.     

Internalizing externalities into capacity expansion planning: The case of electricity in Vietnam

This paper examines the impacts of including external costs such as environmental and health damages from power production on power generation expansion planning in Vietnam. Using the MARKAL model and covering a 20-year period to 2025, the study shows that there are substantial changes in the generation structure in favor of renewable energy technologies and other low emitting technologies. These changes lead to a reduction in fossil fuel requirements, and consequently, a reduction of CO₂, NO_x, SO₂, and PM emissions which could be expected to also reduce the associated environmental and human health impacts. The avoided external costs would be equivalent to 4.4 US cent/kWh. However, these gains are not free as the additional electricity production cost would be around 2.6 US cent/kWh higher if the switch to more expensive, but lower emitting technologies were made. The net benefit of internalizing these externalities is thus around 1.8 US cent/kWh.     

External costs of fossil electricity generation: Health-based assessment in Thailand

Airborne pollutants from fossil fuel burning in electricity generation potentially contribute a number of consequent environmental impacts. In order to indicate the actual costs of energy, a so-called external cost has become of growing concerns internationally. This study aims to evaluate the external costs related to human health degradation resulting from Thai electricity generation produced from fossil fuel which operated during the period from 2006 to 2008. Impact Pathway Approach (IPA) was applied in the analysis. The advections of the criteria pollutants (SO₂, NO_X, and PM₁₀) including secondary particulates (sulfate and nitrate aerosols) had been simulated using the CALMET/CALPUFF modeling system. Subsequently, the exposure-response functions (ERFs) were used to quantify the marginal damage to public health. Finally, costs of such damages were then estimated based on welfare economics. The results showed that the criteria pollutants caused significant damage to both premature mortality and morbidity. The average damage cost was totally about 600 million 2005 US$ annually which ranged between 0.05 and 4.17 US$ cent kWh⁻¹ depending on fuel types. It implies that the external costs are significant to the determination of electricity market price. With the damage costs being included, the electricity price will reflect the true costs of the generation which will be beneficial to the society as a whole.     

Cost of energy and environmental policy in Portuguese CO2 abatement—scenario analysis to 2020

This paper quantifies the contribution of Portuguese energy policies for total and marginal abatement costs (MAC) for CO₂ emissions for 2020. The TIMES_PT optimisation model was used to derive MAC curves from a set of policy scenarios including one or more of the following policies: ban on nuclear power; ban on new coal power plants without carbon sequestration and storage; incentives to natural gas power plants; and a cap on biomass use. The different MAC shows the policies’ effects in the potential for CO₂ abatement. In 2020, in the most encompassing policy scenario, with all current and planned policies, is possible to abate only up to +35% of 1990 emissions at a cost below 23 € t/CO₂. In the more flexible policy scenarios, it is possible to abate up to −10% of 1990 emissions below the same cost. The total energy system costs are 10–13% higher if all policies are implemented—76 to 101 B€—roughly the equivalent to 2.01–2.65% of the 2005 GDP. Thus, from a CO₂ emission mitigation perspective, the existing policies introduce significant inefficiencies, possibly related to other policy goals. The ban on nuclear power is the instrument that has the most significant effect in MAC.     

Effects of Kosovo’s energy use scenarios and associated gas emissions on its climate change and sustainable development

Climate change will be the first truly global challenge for sustainability. Energy production and consumption from fossil fuels has central role in respect to climate change, but also to sustainability in general. Because climate change is regionally driven with global consequences and is a result of economic imperatives and social values, it requires a redefinition as to the balance of these outcomes globally and regionally in Kosovo. Kosovo as one of the richest countries with lignite in Europe, with 95–97% of the electric power production from lignite and with 90% of vehicles over 10 years old, represents one of the regions with the greatest ratio of CO₂ emissions per unit of GDP, as well as one of the countries with the most polluted atmosphere in Europe. The modelling is carried out regionally for Kosovo for two dynamical systems which are the main emitters of greenhouse gases (CO₂, CH₄, NO_x, etc.) and air pollutants (CO, SO₂, dust CH_x, etc.): electricity generation and transportation emissions systems, for the time period 2000–2025. Various energy scenarios of the future are shown. We demonstrate that a transition to environmentally compatible sustainable energy use in Kosovo is possible. Implementing the emission reduction policies and introducing new technologies in electrical power production and transportation in Kosovo ensure a sustainable future development in Kosovo, electric power production and transport that become increasingly environmentally compatible.     

ACROPOLIS: An example of international collaboration in the field of energy modelling to support greenhouse gases mitigation policies

Energy models are considered as valuable tools to assess the impact of various energy and environment policies. The ACROPOLIS initiative, supported by the European Commission and the International Energy Agency, used up to 15 energy models to simulate and evaluate selected policy measures and instruments and then compare their impacts on energy systems essentially in terms of costs of greenhouse gas emissions (GHG) reduction and energy technology choice. Four case studies are formulated considering policies and measures on renewable portfolio schemes and internationally tradable green certificates, emissions trading and global GHG abatement target, energy efficiency standards and internalisation of external costs. The main focus of the project is on the electricity sector. From a large set of quantified results, ACROPOLIS provides an international scientific consensus, on some key issues, which could be useful in assessing and designing energy and environment policies at the world, European and national/regional levels. It concludes that the Kyoto targets (and their continuation beyond 2010 in specific scenarios) could be achieved at a cost around 1% of GDP through global emissions trading, indicating also that this flexibility mechanism is a more cost-effective instrument for GHG mitigation than meeting the goal domestically without trade. It demonstrates that internalising external costs through a price increase reduces local pollutants (SO_x, NO_x, and others) and it produces other benefits such as triggering the penetration of clean technologies in addition to the curbing of CO₂ emissions.     

Wood pellets production costs and energy consumption under different framework conditions in Northeast Argentina

The development of cleaner and renewable energy sources are needed in order to reduce dependency and global warming. Wood pellets are a clean renewable fuel and has been considered as one of the substitutes for fossil fuels. In Argentina, large quantities of sawmill residues are still unused and wood pellets production could be seen as both, as an environmental solution and an extra economical benefit. The general aim of this study was to determine the wood pellets production costs and energy consumption under different framework conditions in northeast Argentina. The specific costs of wood pellets for the different scenarios showed relative lower costs comparing to the ones reported in other studies, ranging from 35 to 47 €/Mg_pellets. Raw material costs represented the main cost factor in the calculation of the total pellets production costs. A lower specific production cost was observed when 50% of the raw material input was wood shavings. The specific electricity consumption per metric ton of pellet was lower in scenarios with higher production rate. Lower heat energy consumption was observed in scenarios that have a mixed raw material input. The most promising framework condition for Northeast Argentina, in terms of costs effectiveness and energy consumption could be acquired with production rates of 6 Mg/h with sawdust and wood shavings as raw material. However, simultaneous increment of the electricity by 50% and raw material price by 100% may increase the specific costs up to 50%.     

Impact of electric vehicles on a future renewable energy‐based power system in Europe with a focus on Germany

Electric mobility is expected to play a key role in the decarbonisation of the energy system. Continued development of battery electric vehicles is fundamental to achieving major reductions in the consumption of fossil fuels and of CO₂ emissions in the transport sector. Hydrogen can become an important complementary synthetic fuel providing electric vehicles with longer ranges. However, the environmental benefit of electric vehicles is significant only if their additional electricity consumption is covered by power production from renewable energy sources. Analysing the implications of different scenarios of electric vehicles and renewable power generation considering their spatial and temporal characteristics, we investigate possible effects of electric mobility on the future power system in Germany and Europe. The time horizon of the scenario study is 2050. The approach is based on power system modelling that includes interchange of electricity between European regions, which allows assessing long‐term structural effects in energy systems with over 80% of renewable power generation. The study exhibits strong potential of controlled charging and flexible hydrogen production infrastructure to avoid peak demand increases and to reduce the curtailment of renewable power resulting in reduced system operation, generation, and network expansion costs. A charging strategy that is optimised from a systems perspective avoids in our scenarios 3.5 to 4.5 GW of the residual peak load in Germany and leads to efficiency gains of 10% of the electricity demand of plug‐in electric vehicles compared with uncontrolled loading.     

Cost and CO2 aspects of future vehicle options in Europe under new energy policy scenarios

New electrified vehicle concepts are about to enter the market in Europe. The expected gains in environmental performance for these new vehicle types are associated with higher technology costs. In parallel, the fuel efficiency of internal combustion engine vehicles and hybrids is continuously improved, which in turn advances their environmental performance but also leads to additional technology costs versus today’s vehicles. The present study compares the well-to-wheel CO₂ emissions, costs and CO₂ abatement costs of generic European cars, including a gasoline vehicle, diesel vehicle, gasoline hybrid, diesel hybrid, plug in hybrid and battery electric vehicle. The predictive comparison is done for the snapshots 2010, 2020 and 2030 under a new energy policy scenario for Europe. The results of the study show clearly that the electrification of vehicles offer significant possibilities to reduce specific CO₂ emissions in road transport, when supported by adequate policies to decarbonise the electricity generation. Additional technology costs for electrified vehicle types are an issue in the beginning, but can go down to enable payback periods of less than 5 years and very competitive CO₂ abatement costs, provided that market barriers can be overcome through targeted policy support that mainly addresses their initial cost penalty.     

Economic comparison between coal-fired and liquefied natural gas combined cycle power plants considering carbon tax: Korean case

Economic growth is main cause of environmental pollution and has been identified as a big threat to sustainable development. Considering the enormous role of electricity in the national economy, it is essential to study the effect of environmental regulations on the electricity sector. This paper aims at making an economic analysis of Korea's power plant utilities by comparing electricity generation costs from coal-fired power plants and liquefied natural gas (LNG) combined cycle power plants with environmental consideration. In this study, the levelized generation cost method (LGCM) is used for comparing economic analysis of power plant utilities. Among the many pollutants discharged during electricity generation, this study principally deals with control costs related only to CO₂ and NO₂, since the control costs of SO₂ and total suspended particulates (TSP) are already included in the construction cost of utilities. The cost of generating electricity in a coal-fired power plant is compared with such cost in a LNG combined cycle power plant. Moreover, a sensitivity analysis with computer simulation is performed according to fuel price, interest rates and carbon tax. In each case, these results can help in deciding which utility is economically justified in the circumstances of environmental regulations.     

The regional electricity generation mix in Scotland: A portfolio selection approach incorporating marine technologies

Standalone levelised cost assessments of electricity supply options miss an important contribution that renewable and non-fossil fuel technologies can make to the electricity portfolio: that of reducing the variability of electricity costs, and their potentially damaging impact upon economic activity. Portfolio theory applications to the electricity generation mix have shown that renewable technologies, their costs being largely uncorrelated with non-renewable technologies, can offer such benefits. We look at the existing Scottish generation mix and examine drivers of changes out to 2020. We assess recent scenarios for the Scottish generation mix in 2020 against mean-variance efficient portfolios of electricity-generating technologies. Each of the scenarios studied implies a portfolio cost of electricity that is between 22% and 38% higher than the portfolio cost of electricity in 2007. These scenarios prove to be mean-variance “inefficient” in the sense that, for example, lower variance portfolios can be obtained without increasing portfolio costs, typically by expanding the share of renewables. As part of extensive sensitivity analysis, we find that Wave and Tidal technologies can contribute to lower risk electricity portfolios, while not increasing portfolio cost.     

Spanish energy roadmap to 2020: Socioeconomic implications of renewable targets

The European Union has established challenging targets for the share of renewable energies to be achieved by 2020; for Spain, 20% of the final energy consumption must be from renewable sources at such time. The aim of this paper is the analysis of the consequences for the electricity sector (in terms of excess cost of electricity, investment requirements, land occupation, CO₂ emissions and overcapacity of conventional power) of several possibilities to comply with the desired targets. Scenarios are created from different hypotheses for energy demand, biofuel share in final energy in transport, contribution of renewables for heating and cooling, renewable electricity generation (generation mix, deployment rate, learning curves, land availability) and conventional power generation (lifetime of current installations, committed deployment, fossil fuel costs and CO₂ emissions cost). A key input in the estimations presented is the technical potential and the cost of electricity from renewable sources, which have been estimated in previous, detailed studies by the present authors using a methodology based on a GIS (Geographical Information System) and high resolution meteorological data. Depending on the scenario, the attainment of the targets will lead to an increase in the cost of electricity from 19% to 37% with respect to 2007.     

Integrated model framework for the evaluation of an SOFC/GT system as a centralized power source

New power generation technologies are expected to reduce various environmental impacts of providing electricity to urban regions for some investment cost. Determining which power generation technologies are most suitable for meeting the demand of a particular region requires analysis of tradeoffs between costs and environmental impacts. Models simulating different power generation technologies can help quantify these tradeoffs. An Internet‐based modelling infrastructure called DOME (distributed object‐based modelling environment) provides a flexible mechanism to create integrated models from independent simulation models for different power generation technologies. As new technologies appear, corresponding simulation models can readily be added to the integrated model. DOME was used to combine a simulation model for hybrid SOFC (solid oxide fuel cell) and gas turbine system with a power generation capacity and dispatch optimization model. The integrated models were used to evaluate the effectiveness of the system as a centralized power source for meeting the power demand in Japan. Evaluation results indicate that a hybrid system using micro‐tube SOFC may reduce CO₂ emissions from power generation in Japan by about 50%. Copyright © 2004 John Wiley & Sons, Ltd.     

Power sector scenarios for Thailand: An exploratory analysis 2002–2022

Power sector scenarios for Thailand are constructed in this paper to represent the range of opportunities and constraints associated with divergent set of technical and policy options. They include Business-As-Usual (BAU), No-New-Coal (NNC), and Green Futures (GF) scenarios over a 20-year period (2002–2022). The results from the BAU scenario show that fossil fuels will continue to dominate electricity generation in Thailand during the study period. Similar results are obtained for the NNC option, although the dependence shifts from coal and oil towards natural gas-based power generation. This may represent a better environmental pathway but an all out shift from coal to natural gas is likely to increase Thailand's dependence on imported fuel, making it more vulnerable to unstable global oil and gas prices. The GF scenario offers a more optimistic route that allows the country to confront its energy security dilemma whilst fulfilling its environmental commitments by giving renewable energy technologies a prominent place in the country's power generation mix. Over the study period, our result showed little difference between the three scenarios in terms of financing new generation plants despite an early misgiving about the viability of an ambitious renewable energy programme. This paper also goes beyond the financial evaluation of each scenario to provide a comparison of the scenarios in terms of their greenhouse gas emissions together with the comparative costs of emissions reductions. Indeed, if such externalities are taken into account to determine ‘viability’, the GF scenario represents an attractive way forward for the Thai power sector.     

Electricity sector reforms in four Latin-American countries and their impact on carbon dioxide emissions and renewable energy

This paper analyzes carbon dioxide (CO₂) emissions related to energy consumption for electricity generation in four Latin-American countries in the context of the liberalization process. From 1990 to 2006, power plants based on renewable energy sources decreased its share in power installed capacity, and the carbon index defined as CO₂ emission by unit of energy for electricity production stayed almost constant for all countries with the exception of Colombia, where the index reduced due to increase in hydroelectricity generation in the last years. The paper also presents a new set of policies to promote renewable energy sources that have been developed in the four countries. The paper concludes that restructuring did not bring about environmental benefits related to a decrease in CO₂ emissions because this depend on the existence of committed policies, and dedicated institutional and regulatory frameworks.     

Transitioning electricity systems: The environmental benefits and economic cost of repurposing surplus electricity in non-conventional end users

A power grid with a lower global warming impact has the potential to extend its benefits to energy systems that conventionally do not utilize electricity as their primary energy source. This study presents the case of Ontario where the role of complementing policies in transitioning electricity systems is assessed. The policy cost to incentivize surplus low emission electricity via an established mechanism for the transportation sector has been estimated (Electric and Hydrogen Vehicle Incentive Program). It is estimated that the 9056 (4760 battery and 4296 plug-in hybrid) electric vehicles that qualified for incentives from the provincial government at the end of 2016 vehicles cost $732.5-$883.9 to reduce a tonne of CO_2,e emissions over an eight year lifetime. This is then compared with the potential cost incurred by two power to gas energy hubs that utilize clean surplus electricity from the province to offset emissions within the natural gas sector. The use of hydrogen-enriched natural gas and synthetic natural gas (SNG) offsets emissions at $87.8 and $228.7 per tonne of CO_2,e in the natural gas sector. This analysis highlights the potential future costs for incentivizing new clean technologies such as electric vehicles and power to gas energy hubs in jurisdictions with a transitioning electricity system.     

Electricity consumption and CO2 capture potential in Spain

In this paper, different electricity demand scenarios for Spain are presented. Population, income per capita, energy intensity and the contribution of electricity to the total energy demand have been taken into account in the calculations. Technological role of different generation technologies, i.e. coal, nuclear, renewable, combined cycle (CC), combined heat and power (CHP) and carbon capture and storage (CCS), are examined in the form of scenarios up to 2050. Nine future scenarios corresponding to three electrical demands and three options for new capacity: minimum cost of electricity, minimum CO₂ emissions and a criterion with a compromise between CO₂ and cost (CO₂-cost criterion) have been proposed. Calculations show reduction in CO₂ emissions from 2020 to 2030, reaching a maximum CO₂ emission reduction of 90% in 2050 in an efficiency scenario with CCS and renewables. The contribution of CCS from 2030 is important with percentage values of electricity production around 22–28% in 2050. The cost of electricity (COE) increases up to 25% in 2030, and then this value remains approximately constant or decreases slightly.     

Nucs down in Germany—Prices up in Europe?

Current legislation on power production from nuclear energy in Germany defines certain remaining quantities of permitted electricity production for nuclear power plants. These quantities are defined for each nuclear power plant and are measured in TWh. In the discussion about climate protection and market trend of electricity prices, it is regularly stated by policy makers that the nuclear phase-out will result in an increase in electricity prices and CO₂ emissions. As a consequence a revision is proposed, especially from the Liberals (FDP) and Conservatives (CDU). The following article discusses this issue analysing the different options investors and operators under different scenarios have. It shows firstly that both emissions and power prices can indeed increase, and secondly that the mere discussion about potentially reversing the phasing-out decision can lead to an increase in electricity prices as investment behaviour may change based on expectations regarding future regulation. I conclude that – ceteris paribus – the nuclear phase-out is likely to result in an increase in CO₂ emissions and prices.