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

External costs of power plants

in Poland

Mariusz KUDELKOWojciech SUWALAJacek KAMINSKI

Mineral and Energy Economy Research InstituteKrakow, Poland

Polish energy sector – energy production1. 97% of electricity produced from fossil

fuels2. Domestic sources of primary energy

dominate the total supply3. All consumed oil and half of natural

gas are imported4. Hard coal and lignite are the main

primary energy sources5. Renewables still have a small share in

the energy balance

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

Polish energy sector – emissions1.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

0

1000

2000

3000

4000

1990 1993 1995 1997 1998 1999 2000

000

tons

Total Energy sector

SO2

0

500

1000

1500

1990 1993 1995 1997 1998 1999 2000

000

tons

Total Energy sector

NOx

0

1000

2000

3000

1990 1993 1995 1997 1998 1999 2000

000

tons

Total Energy sector

PM

Polish energy sector – CO2 emissions

1.Kyoto target = 94% of 1988 level

2.CO2 emissions stabilized in the mid nineties at the level of 360-370 Mtons in total

3.The energy sector, which is the main consumer of solid fuels, is responsible for 56% of CO2 emissions

0

100000

200000

300000

400000

500000

1988 1990 1992 1995 1996 1997 1998 1999 2000

000

tons

Total

Plant characteristics

Data Kozienice Belchatow Lagisza Ostroleka Dolna Odra Siekierki Patnow Adamow PołaniecThe type of power plant coal lignite coal coal coal coal lignite lignite coalGross electricity production in 2002 [MW], 2820 4410 840 600 1600 1293 1200 600 1600Electricity send out in 2002 [MW], 2605 4084 656 559 1455 1179 1111 549 1467Energy production in 2002 brutto [GWh], 9013 27362 3087 1939 4974 4386 6459 3618 6845Energy production in 2002 netto [GWh], 8327 25422 2810 1805 4524 3999 5982 3311 6278% of total annual production of the country 6.0 18.5 2.0 1.3 3.3 2.9 4.3 2.4 4.6Full load hours per year [h] 3196 6224 4284 3232 3109 3392 5383 6031 4278SO2 Emissions [t] 44579 174195 14954 15486 24497 19333 90878 14790 37156NOx Emissions [t] 16128 37203 6644 4264 10578 5305 10786 6806 11727TSP Emissions [t] 2133 2381 690 994 613 1574 2371 1396 1758SO2 Emissions [mg/Nm3] 1884 1777 1245 2130 1239 1425 3211 916 1551NOx Emissions [mg/Nm3] 557 380 553 586 535 391 381 422 489TSP Emissions [mg/Nm3] 84 24 60 137 31 116 84 86 73Stack height [m], 200 300 180 120 200 200 150 150 250Anemometer hieght [m] 200 300 180 120 200 200 150 150 250Stack diameter [m], 13.8 20.8 9.2 6.2 13.1 11.6 13.9 9.9 11.7Flue gas volume [Nm3/h], 7404182 15750000 2800000 2250000 6360000 4000000 5258000 2676600 5598242Flue gas temperature [K] 396 386 420 373 393 426.7 453 453 393Elevation at site [mnpm]. 107 196 320 100 5 81 93 111 161Geograpfical longtitude [degree] 21o29' 19o22' 19o08' 21o35' 14o28' 21o02' 18o16' 18o05' 21o17'Geograpfical latitude [degree] 51o40' 51o22' 50o19' 53o05' 53o12' 52o12' 52o13' 52o16' 50o26'Location rural rural urban urban rural urban rural rural rural

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- 65lignite - 5

Energy production, 2002, GWh

Gdansk

Warszawa

Katowice

Lodz

Poznan

Czech Republic

Germany

Ukraine

Slovakia

Belarus

Russia

CHP Ostroleka


PP Lagisza

PP Dolna Odra

CHP Siekierki

Lignite PP Patnow

Lignite PP Adamow

PP Polaniec

PP Kozienice

1805

25422

2810

4524

3999

5982

3311

6278

8327

Total energy production, TWh:hard coal- 83lignite - 50

SO2 emissions, 2002, mg/Nm3

Gdansk

Warszawa

Katowice

Lodz

Poznan

Czech Republic

Germany

Ukraine

Slovakia

Belarus

Russia

CHP Ostroleka


PP Lagisza

PP Dolna Odra

CHP Siekierki

Lignite PP Patnow

Lignite PP Adamow

PP Polaniec

PP Kozienice

2130

1777

1245

1425

3211

916

1551

1884

1239

Total emissions, 000 t:SO2 - 780NOX - 242PM10 - 58

Stack height, m

Gdansk

Warszawa

Katowice

Lodz

Poznan

Czech Republic

Germany

Ukraine

Slovakia

Belarus

Russia

CHP Ostroleka


PP Lagisza

PP Dolna Odra

CHP Siekierki

Lignite PP Patnow

Lignite PP Adamow

PP Polaniec

PP Kozienice

120

300

180

200

200

150

150

250

200

Typical stack height, m:hard coal- 120lignite - 160

Results (EcoSense 2.0)

External costs of Polish power plants, cents Euro/kWh

low mid high low mid high low mid high low mid high low mid high low mid high low mid high low mid high low mid high1.80 2.07 2.34 2.48 2.87 3.26 2.61 2.99 3.37 2.51 2.87 3.23 2.23 2.56 2.89 1.56 1.78 2.01 4.97 5.76 6.55 2.03 2.32 2.60 2.24 2.56 2.89



low mid high low mid high low mid high low mid high low mid high low mid high low mid high low mid high low mid high0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

low mid high low mid high low mid high low mid high low mid high low mid high low mid high low mid high low mid high0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0


Total damage estimates of the power generation stage in mln Euro/yearlow mid high low mid high low mid high low mid high low mid high low mid high low mid high low mid high low mid high155 183 208 652 784 896 76 90 103 47 54 62 103 121 137 64 75 86 308 370 423 69 81 92 145 170 194

Damage structure estimates of the power generation stage in mln Euro/year

low mid high low mid high low mid high low mid high low mid high low mid high low mid high low mid high low mid high128 154 177 622 751 860 62 74 86 36 42 49 73 88 101 50 60 69 299 361 413 48 58 67 116 140 16117 19 21 17 18 19 10 10 11 7 8 9 28 30 33 8 9 10 -4 -5 -5 14 15 16 20 21 23

9 10 11 14 15 16 5 5 6 3 4 4 3 3 4 6 6 7 13 14 15 8 8 9 8 9 10

Damage estimates of the power generation stage in Euro/t poluttant emittedlow mid high low mid high low mid high

2874 3453 3970 3569 4311 4937 4118 4966 5751 2301 2743 3168 2962 3587 4129 2595 3115 3584 3292 3973 4544 3241 3908 4499 3135 3757 43321084 1178 1272 446 485 524 1435 1559 1683 1745 1895 2046 2633 2861 3089 1528 1660 1793 -416 -452 -488 1998 2171 2344 1671 1815 19604253 4621 4989 5791 6291 6793 6981 7585 8190 3472 3772 4073 4875 5297 5719 3739 4063 4387 5485 5960 6435 5562 6043 6525 4790 5204 5619

forest

ecosystems

Total

Patnowhuman

crops

material

forest

ecosystems

Total

Siekierkihuman

crops

material

forest

ecosystems

Total

Lagiszahuman

crops

material

cropscrops

material

forest

Total Total

ecosystems

Kozienicehumanhuman

Belchatow

material

forest

ecosystems

forest

ecosystems

Total

Ostrolekahuman

crops

material

forest

ecosystems

Total

Dolna Odrahuman

crops

material

Adamowhuman

crops

material

forest

ecosystems

Total

Połaniechuman

crops

material

forest

ecosystems

Total


0

1

2

3

4

5

6

7

Eu

ro c

en

ts/k

Wh

(m

id v

alu

es

)

Kozienice Belchatow Lagisza Ostroleka Dolna Odra Siekierki Patnow Adamow Połaniec

ecosystems

forest

material

crops

human

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

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


-1000

0

1000

2000

3000

4000

5000

6000

7000

8000

Eu

ro/M

g p

olu

tan

t e

mit

ted

(mid

va

lue

s)


SO2

NOx

PM10

average SO2 (mid value) = 3942

average NOx (mid value) = 1206

average PM10 (mid value) = 5685


0

500

1000

1500

2000

2500

mln

Eu

ro/y

ea

r

low mid high

Połaniec

Siekierki

Dolna Odra

Ostroleka

Lagisza

Kozienice

Adamow

Patnow

Belchatow

Total external costs of power plants

Gdansk

Warszawa

Katowice

Lodz

Poznan

Czech Republic

Germany

Ukraine

Slovakia

Belarus

Russia

CHP Ostroleka


PP Lagisza

PP Dolna Odra

CHP Siekierki

Lignite PP Adamow

PP Polaniec

PP Kozienice

2,68

3,19

6,19

3,082,44

2,70

2,19

1.88

3,00

3,58

3,48

9,43

4,38

Lignite PP Patnow

4,52

3,41

4,68

4,45 2,50

v. 2.0 v. 4.0

Results, external costs, Euro cents/kWh

Results

0

1

2

3

4

5

6

7

8

9

10

Eu

ro c

en

ts/k

Wh

(m

id v

alu

es

)


v. 2.0

v. 4.0

Results

0

1000

2000

3000

4000

5000

6000

7000

8000

Eu

ro/M

g p

olu

tan

t e

mit

ted

(mid

va

lue

s)


SO2

v. 2.0

v. 4.0

Results

-500

0

500

1000

1500

2000

2500

3000

Eu

ro/M

g p

olu

tan

t e

mit

ted

(mid

va

lue

s)


NOx

v. 2.0

v. 4.0

Results

0

2000

4000

6000

8000

10000

12000

Eu

ro/M

g p

olu

tan

t e

mit

ted

(mid

va

lue

s)


PM10

v. 2.0

v. 4.0

ResultsEnergy production in Poland, GWhhard coal 83069lignite 50557Total 133626

Poland

v. 4.0 v. 4.0

Average external costs, cents Euro/kWh low mid high mid midhard coal 2.12 2.50 2.85 3.95 1.59lignite 2.96 3.56 4.06 5.17 2.43

Total external cost, mln Euro low mid high mid midhard coal 1764 2077 2364 3278 1319lignite 1499 1799 2054 2614 1227Total 3263 3876 4418 5892 2546

Average external costs, Euro/t low mid high midSO2 3271 3942 4527 6045NOx 1110 1206 1302 1418PM10 5233 5685 6138 7469

All countries

v. 2.0

National, as% of total costs

Poznan

Czech Republic

Germany

Ukraine

Slovakia

Belarus

Russia

CHP Ostroleka


PP Lagisza

PP Dolna Odra

CHP Siekierki

Lignite PP Patnow

Lignite PP Adamow

PP Polaniec

PP Kozienice39%

34%

45%

45%

47%

50%

48%49%

35%

Total external costs, mln Euro:

All countries 5892

Poland 2546 (43%)

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

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

Main assumptions - 1

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

2. Demand side:

industry and construction, transport, agriculture,

trade and services, individual consumers and

export

Main assumptions - 2

3. 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

Supplies Demand

IndustryIndustry

TransportTransport

AgricultureAgriculture

Trade and services

Trade and services

HouseholdsHouseholds

ExportExport

hard coallignite

hard coallignite

oiloil

natural gasnatural gas

renewablesnuclear energy renewables

nuclear energy

Domestic + Import

Public power plants

Public power plants

Public CHP plants

Public CHP plants

Industry CHP plants

Industry CHP plants

Municipal heat plants, industry

heat plants


heat plants

Primary energy supplies Transformation

ConsumptionTechnologies

Exist

ing

tech

nolo

gies

M

oder

nise

d te

chno

logi

esNe

w te

chno

logi

es

Exist

ing

tech

nolo

gies

M

oder

nise

d te

chno

logi

esNe

w te

chno

logi

es

electricity

electricity

heat

electricity

heat

heat

heat

Domestic + Import

Supplies Demand

IndustryIndustry

TransportTransport

AgricultureAgriculture

Trade and services

Trade and services

HouseholdsHouseholds

ExportExport

hard coallignite

hard coallignite

oiloil

natural gasnatural gas

renewablesnuclear energy renewables

nuclear energy

Domestic + Import

Public power plants

Public power plants

Public CHP plants

Public CHP plants

Industry CHP plants

Industry CHP plants


heat plants


heat plants

Primary energy supplies Transformation

ConsumptionTechnologies

Exist

ing

tech

nolo

gies

M

oder

nise

d te

chno

logi

esNe

w te

chno

logi

es

Exist

ing

tech

nolo

gies

M

oder

nise

d te

chno

logi

esNe

w te

chno

logi

es

electricity

electricity

heat

electricity

heat

heat

heat

Domestic + Import

General structure of the model

Type of fuel.Type of fuel.

Source of supply

Source of supply

Capacity of supply

Capacity of supply

DomesticDomestic ImportImport

Existing technologies

Existing technologies

Technology efficiency


Fuel consump. rate

Fuel consump. rate Load periodsLoad periods

Electricity/heat ratio

Electricity/heat ratio

Transport losses

Transport losses

Demand sectors

Demand sectors

Demands ratio in load periods

Demands ratio in load periods

Balance of fuels supplies

Balance of fuels supplies

Energy balance of production

Energy balance of production

Balance of production and demand for final

energy

Balance of production and demand for final

energyFuels

supplies

Fuels supplies

Energy production

Energy production

Consumers demand

Consumers demand

Energy priceEnergy price

Demand functionsDemand functions

Price elasticity

Price elasticity

Income elasticityIncome elasticity

Balance of production capacity

Balance of production capacity

Balance of production investments

Balance of production investments CapacityCapacityProduction

investments

Production investments

Availability factorAvailability factor Technology efficiency


Balance of abatement capacity

Balance of abatement capacity

Balance of environ. investments

Balance of environ. investments CapacityCapacityEnviron.

investments

Environ. investments

Abatement technologiesAbatement

technologies

Balance of emissionsBalance of emissionsEmissions reduction

Emissions reduction

EmissionsEmissionsBalance of emissions reduction

Balance of emissions reduction

Efficiency of abatement

technologies

Efficiency of abatement

technologies

Emissions factor

Emissions factor

Unit external costs

Unit external costs

Balances Balances VariablesVariables ParametersParameters Costs component

Costs component

Legend:

Modernization of technologiesModernization of technologies

New technologies

New technologies

ImportImport

ExportExport

Fuel costsFuel costsInvestment

costs of technol. prod.

Investment costs of

technol. prod.

Fixed and variable costs

of technol. prod.

Fixed and variable costs

of technol. prod.

Investment costs of

abatement technol.

Investment costs of

abatement technol.

Fixed and variable costs of abatement

technol.

Fixed and variable costs of abatement

technol.

Private costs

Balance of Import and

export costs

Balance of Import and

export costs External costsExternal costsConsumers and

producers surplus

Consumers and producers

surplus

Social welfare

Scenarios

Variant 1 Variant 2

scenario 1 scenario 2 scenario 3

Type of the model linear non-linear non-linear non-linear

Objective function minimization of cost of energy

production

maximization of consumers’ and

producers’ surpluses

maximization of consumers’ and

producers’ surpluses less external costs

consumers’ and producers’

surpluses less external costs

Demand determined calculated calculated calculated

Emissions limited calculated calculated calculated

External costs not considered not considered partly considered (only SO2, NOX,

and TSP)

fully considered (SO2, NOX, CO2

and TSP)

Results, variant 1

0

200

400

600

800

1000

1200

1400

2002 2003 2004 2005 2010 2015 2020

Pro

du

ctio

n [

PJ]

Hard coal Lignite Natural gas

Renewables Other

2002 2003 2004 2005 2010 2015 2020

Production, PJ : Electricity 513 518 518 525 540 656 762 Heat 572 567 559 554 552 551 551 Total 1085 1085 1077 1079 1092 1207 1313 Unit cost of electricity production, zl/MWh 112,7 113,5 114,7 116,5 120,8 135,6 146,4 Unit cost of heat production, zl/GJ 20,6 21,2 21,7 22,3 25,3 31,8 34,3 Technological investments, MW 0 3600 3420 4185 20806 37555 23084 Abatement investments, MW 0 0 0 12145 1790 26905 6344

Results, variant 2, scenario 3

0

200

400

600

800

1000

1200

1400

2002 2003 2004 2005 2010 2015 2020

Pro

du

ctio

n [

PJ]

Hard coal Lignite Natural gas

Renewables Other

2002 2003 2004 2005 2010 2015 2020

Production, PJ : Electricity 448 457 462 461 512 558 605 Heat 324 337 347 360 398 442 480 Total 772 794 809 821 910 1000 1085 Price of electricity production, zl/MWh 183,6 186,2 190,8 202,7 205,0 211,6 215,9 Price of heat production, zl/GJ 56,1 55,6 55,2 54,7 55,5 55,3 55,9 Technological investments, MW 0 3091 3457 5234 22715 18237 17151 Abatement investments, MW 108534 3464 3441 2899 13550 21431 28610

Results, private and social welfare

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 SO2 97 115 44 37 NOX 33 33 15 12 CO2 63 64 54 48 TSP 72 73 26 17

Private welfare - 656 599 576 Social welfare - 371 460 462

Consumers’ surplus - 0 -13 -19 Producers’ surplus - 0 11 23 Private costs - 0 2 5

External costs, including: - 0 -51 -60 SO2 - 0 -62 -68 NOX - 0 -55 -64 CO2 - 0 -16 -25 TSP - 0 -64 -77

Private welfare - 0 -9 -12 Social welfare - 0 24 25

bln zl

%

Conclusions - 1

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

2. In the partial equilibrium model with external costs

internalised the dominant position of solid fuels

decreases in favour of gas and renewables

Conclusions - 2

3. 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

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

Documents

emissions slide

lignite mines slide

energy balance slide

poland slide

conopt slide

export slide

polish energy sector

energy technologies