A realistic EU vision of a lignite-based energy system in transition: Case study of Serbia

Abstract

Several Contracting Parties to the Treaty establishing the Energy Community of the South East Europe, currently in energy transition, have electricity production dominantly based on lignite which contrasts their new reality. Planning approach to designing a new feasible energy policy is presented in this paper. This novel approach in using EnergyPLAN tool stems from analysis of market operation of lignite thermal power plants on hourly basis, and quantification of the feasibility of the energy policy and its alignment with EU vision, and is presented in few scenarios. It was found out that the Serbian energy system is highly sensitive to the electricity market and CO2 tax increase, because the marginal costs for lignite generation will increase to more than 50?/MWh. Shifting in the merit order will be observed even at lower CO2 tax levels, because of the intensity of the emission of the electricity sector (calculated to be higher than 700gCO2/kWhel, according to current energy policy). Based on the increased use of renewable energy sources and more efficient energy conversion technologies, socio-economic and energy policy feasibility would be increased, while long-term marginal costs would be improved by 2?/MWh and emission intensity by 258 gCO2/kWhel, compared to the current energy policy. These contributions, shown in the Serbian case, are of general importance for other lignite dominated Contracting Parties to Treaty establishing the Energy Community.