Assessing the Effects of Uncertain Energy and Carbon Prices on the Operational Patterns and Economic Results of CHP Systems

Pablo Benalcazar, Przemysław Kaszyński and Jacek Kamiński
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Pablo Benalcazar: Division of Energy Economics, Mineral and Energy Economy Research Institute of the Polish Academy of Sciences, ul. J. Wybickiego 7A, 31-261 Kraków, Poland
Przemysław Kaszyński: Division of Energy Economics, Mineral and Energy Economy Research Institute of the Polish Academy of Sciences, ul. J. Wybickiego 7A, 31-261 Kraków, Poland
Jacek Kamiński: Division of Energy Economics, Mineral and Energy Economy Research Institute of the Polish Academy of Sciences, ul. J. Wybickiego 7A, 31-261 Kraków, Poland

Energies, 2021, vol. 14, issue 24, 1-19

Abstract: In the power and heat sectors, the uncertainty of energy and carbon prices plays a decisive role in the rationale for decommissioning/repurposing coal-fired CHP (combined heat and power) systems and on investment decisions of energy storage units. Therefore, there is a growing need for advanced methods that incorporate the stochastic disturbances of energy and carbon emission prices into the optimization process of an energy system. In this context, this paper proposes an integrated method for investigating the effects of uncertain energy and carbon prices on the operational patterns and financial results of CHP systems with thermal energy storage units. The approach combines mathematical programming and Monte Carlo simulation. The computational process generates feasible solutions for profit maximization considering the technical constraints of the CHP system and the variation of energy and carbon emission prices. Four scenarios are established to compare the operational patterns and economic performance of a CHP system in 2020 and 2030. Results show that in 2020, there is an 80% probability that the system’s annual profit will be less than or equal to €30.98 M. However, at the same probability level, the annual profit in 2030 could fall below €11.88 M. Furthermore, the scenarios indicate that the incorporation of a thermal energy storage unit leads to higher expected profits (€0.74 M in 2020 and €0.71 M in 2030). This research shows that coal-fired CHP plant operators will face costly risks and potentially greater challenges in the upcoming years with the increasing regulatory and financial pressure on CO 2 emissions and the EU’s plan of phasing out fossil fuels from electricity and heat generation.

Keywords: combined heat and power; optimization; thermal energy storage; uncertainty; district heating (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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