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
Lignite PP Belchatow
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
Lignite PP Belchatow
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
Lignite PP Belchatow
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 high0.00 0.03 0.00 0.00 0.06 0.00 0.00 0.04 0.00 0.00 0.02 0.00 0.00 0.03 0.00 0.00 0.02 0.00 0.00 0.13 0.00 0.00 0.03 0.00 0.00 0.03 0.00
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 high0.05 0.09 0.16 0.09 0.15 0.26 0.10 0.16 0.29 0.07 0.12 0.20 0.06 0.09 0.14 0.05 0.08 0.14 0.18 0.30 0.52 0.06 0.10 0.17 0.07 0.11 0.20
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
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 high1.86 2.20 2.50 2.57 3.08 3.52 2.70 3.20 3.66 2.58 3.01 3.43 2.29 2.68 3.04 1.60 1.89 2.14 5.14 6.19 7.07 2.09 2.45 2.77 2.30 2.71 3.09
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
Results (EcoSense 2.0)
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
Results (EcoSense 2.0)
-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)
Kozienice Belchatow Lagisza Ostroleka Dolna Odra Siekierki Patnow Adamow Połaniec
SO2
NOx
PM10
average SO2 (mid value) = 3942
average NOx (mid value) = 1206
average PM10 (mid value) = 5685
Results (EcoSense 2.0)
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
Lignite PP Belchatow
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
)
Kozienice Belchatow Lagisza Ostroleka Dolna Odra Siekierki Patnow Adamow Połaniec
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)
Kozienice Belchatow Lagisza Ostroleka Dolna Odra Siekierki Patnow Adamow Połaniec
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)
Kozienice Belchatow Lagisza Ostroleka Dolna Odra Siekierki Patnow Adamow Połaniec
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)
Kozienice Belchatow Lagisza Ostroleka Dolna Odra Siekierki Patnow Adamow Połaniec
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
Lignite PP Belchatow
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
Municipal heat plants, industry
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
Municipal heat plants, industry
heat plants
Municipal heat plants, industry
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
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
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