Article ID Journal Published Year Pages File Type
995191 Energy Policy 2009 13 Pages PDF
Abstract

Coal-fired power plants enjoy a significant advantage relative to gas plants in terms of cheaper fuel cost. This advantage may erode (or turn into disadvantage) depending on CO2 emission allowance price. Financial risks are further reinforced when the price of electricity is determined by natural gas-fired plants’ marginal costs. We aim to empirically assess the risks in EU coal plants’ margins up to the year 2020. Parameter values are derived from actual market data. Monte Carlo simulation allows compute the expected value and risk profile of coal plants’ earnings. Future allowance prices may spell significant risks on utilities’ balance sheets.

Related Topics
Physical Sciences and Engineering Energy Energy Engineering and Power Technology
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