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Incorporating life cycle external cost in optimization of the electricity generation mix

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  • Rentizelas, Athanasios
  • Georgakellos, Dimitrios

Abstract

The present work aims to examine the strategic decision of future electricity generation mix considering, together with all other factors, the effect of the external cost associated with the available power generation technology options, not only during their operation but also during their whole life cycle. The analysis has been performed by integrating the Life Cycle Assessment concept into a linear programming model for the yearly decisions on which option should be used to minimize the electricity generation cost. The model has been applied for the case of Greece for the years 2012–2050 and has led to several interesting results. Firstly, most of the new generating capacity should be renewable (mostly biomass and wind), while natural gas is usually the only conventional fuel technology chosen. If externalities are considered, wind energy increases its share and hydro-power replaces significant amounts of biomass-generated energy. Furthermore, a sensitivity analysis has been performed. One of the most important findings is that natural gas increases its contribution when externalities are increased. Summing-up, external cost has been found to be a significant percentage of the total electricity generation cost for some energy sources, therefore significantly changing the ranking order of cost-competitiveness for the energy sources examined.

Suggested Citation

  • Rentizelas, Athanasios & Georgakellos, Dimitrios, 2014. "Incorporating life cycle external cost in optimization of the electricity generation mix," Energy Policy, Elsevier, vol. 65(C), pages 134-149.
  • Handle: RePEc:eee:enepol:v:65:y:2014:i:c:p:134-149
    DOI: 10.1016/j.enpol.2013.10.023
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    3. repec:eee:appene:v:206:y:2017:i:c:p:519-530 is not listed on IDEAS
    4. Chen, Hao & Tang, Bao-Jun & Liao, Hua & Wei, Yi-Ming, 2016. "A multi-period power generation planning model incorporating the non-carbon external costs: A case study of China," Applied Energy, Elsevier, vol. 183(C), pages 1333-1345.
    5. Barteczko-Hibbert, Christian & Bonis, Ioannis & Binns, Michael & Theodoropoulos, Constantinos & Azapagic, Adisa, 2014. "A multi-period mixed-integer linear optimisation of future electricity supply considering life cycle costs and environmental impacts," Applied Energy, Elsevier, vol. 133(C), pages 317-334.
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    7. Burgherr, Peter & Hirschberg, Stefan, 2014. "Comparative risk assessment of severe accidents in the energy sector," Energy Policy, Elsevier, vol. 74(S1), pages 45-56.
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    9. Lingling Wang & Tsunemi Watanabe & Zhiwei Xu, 2015. "Monetization of External Costs Using Lifecycle Analysis—A Comparative Case Study of Coal-Fired and Biomass Power Plants in Northeast China," Energies, MDPI, Open Access Journal, vol. 8(2), pages 1-28, February.

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