Environmental and cost efficiency of steam-powered electricity generation in Iran
During the past two decades, environmental side effects of economic activities have become the central part of public and political discussions. An effective energy policy should encourage the different enterprises, utility companies and individuals to utilize energy efficiently and in more en...
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| Main Author: | |
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| Format: | Thesis |
| Language: | English |
| Published: |
2012
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| Online Access: | http://psasir.upm.edu.my/id/eprint/67273/1/IKDPM%202012%203%20IR.pdf http://psasir.upm.edu.my/id/eprint/67273/ |
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| Summary: | During the past two decades, environmental side effects of economic activities have
become the central part of public and political discussions. An effective energy policy
should encourage the different enterprises, utility companies and individuals to utilize
energy efficiently and in more environmental friendly processes, technologies, and
materials. Fossil fuels are responsible for the large amount of human-related air pollution
in Iran. Due to the fact that more than 45.4% of Iranian electricity is produced by steam
plants which are applying fossil fuel, fuel choices play the most important role at national
and even international levels. Among the fossil fuels, natural gas plays the most
important role in Iran’s fuel-fired generating system and is the preferred fuel due to its
cleaner combustion characteristics compared to other fuels. Since few researches had
examined the environmental and economic tradeoffs among the different fuels, this study
estimates the contribution of gas, fuel oil and gas oil inputs and compare it with an alternative substitute (LNG) to illustrate the best available environmental and economical
choice for the largest electricity generation sector in Iran.
To minimize SO2 emissions and costs, the study applies a Data Envelopment Analysis
followed by Charnes, Cooper and Rhodes (CCR) and then DEA-MBP followed by Coelli
et al., 2005 that incorporates the material balance principle (DEA-MBP) in the first stage
of the analysis. Findings are evident that by switching to natural gas, the substantial
increase (nearly 80%) in environmental efficiency and cost efficiency (nearly 30%)
would result while the technical efficiency would demonstrate a nearly 7% decrease.
Therefore, results highlight the positive impact of fuel switching on Cost and
Environmental efficiency scores respectively. By considering the investment pay-back,
the study indicated that small-sized power companies are not considered economical to
switch to mini LNG.
In the second stage of our analysis, the Ordinary Least Square (OLS) estimator were
employed to extract the missing factors in the first stage by regressing the technical, cost
and environmental efficiency scores derived from the DEA on the explanatory variables
(age, size, fuel type and year of observation) which could influence the efficiency levels
of the steam plants in Iran which may not have been considered in the first stage analysis.
The study provides a comprehensive efficiency analysis of specific applications of steam
power plants in Iran to serve the applied strategy to the component stakeholders for doing
policy implication. The results clearly demonstrate that by switching to natural gas and
instructing medium and large size plants instead of small ones, the environmental
efficiency would increase dramatically and the cost efficiency also would indicate an increase while the technical efficiency demonstrates little decrease. Therefore, being
aware of the tradeoffs for individual and also public policy makers seems necessary.
Furthermore, it would be mostly valuable to indicate what changes would be necessary to
increase the efficiency of the most inefficient plants to the level of their efficient peers.
Thus, considering new incentive systems seems reasonable to encourage the best fuel
resources and other factors which simultaneously fulfill the desire for cost and
environmental efficiency especially sulfur reduction. |
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