EU Carbon Emissions Market Development and Its Impact on Penetration of Renewables in the Power Sector

Abstract

This paper focuses on the analysis of the EU carbon trading scheme and its impacts on regional power system development and penetration of renewable energy sources (RES). The aim of the article is to analyze the forecasts of carbon dioxide (EUA) prices for the years 2019–2030 and to apply the results of this forecast in regional power system planning. The data employed in this paper come from many sources, including empirical data of the selected analytical companies, such as Thomson Reuters among others. The current low prices for carbon dioxide emission rights do not encourage the reduction of greenhouse gas emissions, in particular carbon dioxide, and do not have a significant impact on the penetration of renewables. This paper presents the results of two scenarios (for 2021 and 2030) developed after the analysis of the EUA price impact on penetration of renewable energy sources in West-Pomeranian region assuming different electricity production and the EUA price forecasts. The results of two regional energy development scenarios run for 2021 and 2030 indicate changes in the structure of renewables in West-Pomeranian region. The results also show that the increase of EUA price has a significant impact on the increase of costs for power production and increase of unit cost of the installed 1GWh. In addition, the forecasted EUA price in 2030 is 3% lower as compared with 2021, which has its impact on the increased share of electricity produced by co-firing biomass with other fossil—from 42% to 68% in the electricity generation structure of West-Pomeranian region.