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New approach to brown coal pricing using internal rate of return methodology

Author

Listed:
  • Bejbl, Jan
  • Bemš, Julius
  • Králík, Tomáš
  • Starý, Oldřich
  • Vastl, Jaromír

Abstract

Brown coal is one of the dominant local strategic raw materials in Europe, used, to a large extent, in the power-generating industry. The current situation, where the price of gas and electricity precludes the efficient use of gas sources, leads to the extraction of older sources, chiefly brown coal ones. In tandem with a turning away from nuclear power, brown coal is experiencing a renaissance and the issue of brown coal price setting is, and will be, relevant. This paper deals with a proposal of a new method for determining the base price, consisting of defining the reference fuel chain for electricity and heat production based on brown coal. It builds on the notion that the degree of risk of the involved parties should be reflected in the modified amount of revenue per capital invested. The resulting price is then an economically justified price which encourages a respect for the specific features of the market in question and set the base price of the commodity in a way that is acceptable for both the extractive and the productive components of the fuel chain.

Suggested Citation

  • Bejbl, Jan & Bemš, Julius & Králík, Tomáš & Starý, Oldřich & Vastl, Jaromír, 2014. "New approach to brown coal pricing using internal rate of return methodology," Applied Energy, Elsevier, vol. 133(C), pages 289-297.
  • Handle: RePEc:eee:appene:v:133:y:2014:i:c:p:289-297
    DOI: 10.1016/j.apenergy.2014.07.082
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    References listed on IDEAS

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    Cited by:

    1. repec:prg:jnlpol:v:2017:y:2017:i:6:id:1172:p:728-750 is not listed on IDEAS
    2. Janda, Karel & Málek, Jan & Rečka, Lukáš, 2017. "Influence of renewable energy sources on transmission networks in Central Europe," Energy Policy, Elsevier, vol. 108(C), pages 524-537.
    3. repec:eee:enepol:v:106:y:2017:i:c:p:138-147 is not listed on IDEAS
    4. Luňáčková, Petra & Průša, Jan & Janda, Karel, 2017. "The merit order effect of Czech photovoltaic plants," Energy Policy, Elsevier, vol. 106(C), pages 138-147.

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