Power Supply Expansion and the Nuclear Option in Poland

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Poland is in the process of liberalizing and modernizing its electric power system. Given its heavy reliance on coal and a consequent history of often severe environmental externalities associated with power production, the nature of capacity expansion in Poland has important environmental and social implications. To better understand capacity expansion in Poland, we constructed a data set of the Polish power sector for use with the Elfin capacity expansion planning model. Using Elfin, we derived four scenarios and several sensitivities for new generating capacity construction. These scenarios simulate choices among several generic generating technologies made to achieve the lowest overall net present cost of operating the power system through 2015.

We find that natural gas is a highly desirable fuel for future power generation in Poland, but primarily as a peaking resource. As the current system is inflexible and peaking capacity appears to be the most pressing need, this result is not surprising. However, when nuclear power is included as a generation option, natural gas is less desirable than the Polish Power Grid Company (PPGCo) has suggested, and, despite the PPGCo's claims to the contrary, nuclear power cannot be ruled out in Poland on economic grounds alone. In the unconstrained Elfin scenarios, using PPGCo assumptions, nuclear power is attractive, especially after 2010. The attractiveness of nuclear generation proves sensitive to certain input variables, however, notably fixed operating and maintenance cost, and possible carbon taxes. Moreover, we find that the effectiveness of conservation efforts designed to reduce airborne emissions is limited under scenarios in which nuclear generation is adopted.

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