Comparison of Energy Efficiency Measures and Generation Options

Abstract

Security of energy supply is a key to social and economic development of society. Liberalization of power market has brought changes in the process of decision making regarding new investments in power system and certain concerns arise related to adequacy of the present investments. Taking into consideration that significant amount of generating capacities in Croatian power system will be shut down in the following years, it will be even more challenging to satisfy a growing demand. Energy saved through energy efficiency measures can be considered an alternative source of energy. Within this thesis a question has been answered whether it is more economically feasible to invest public money in new generating capacities or to invest it in large-scale energy efficiency improvements. The answer has been provided through calculating levelized cost of electricity of three different electricity generating options and comparing it to energy saving costs of currently proposed energy efficiency measures. Furthermore, the problem of peaking capacity and fixed costs recovery has been analyzed. It has been concluded that a certain capacity mechanism is needed in order to ensure investment costs recovery and stimulate investments.