Abstract

Economic growth is main cause of environmental pollution and has been identified as a big threat to sustainable development. Considering the enormous role of electricity in the national economy, it is essential to study the effect of environmental regulations on the electricity sector. This paper aims at making an economic analysis of Korea's power plant utilities by comparing electricity generation costs from coal-fired power plants and liquefied natural gas (LNG) combined cycle power plants with environmental consideration. In this study, the levelized generation cost method (LGCM) is used for comparing economic analysis of power plant utilities. Among the many pollutants discharged during electricity generation, this study principally deals with control costs related only to CO2 and NO2, since the control costs of SO2 and total suspended particulates (TSP) are already included in the construction cost of utilities. The cost of generating electricity in a coal-fired power plant is compared with such cost in a LNG combined cycle power plant. Moreover, a sensitivity analysis with computer simulation is performed according to fuel price, interest rates and carbon tax. In each case, these results can help in deciding which utility is economically justified in the circumstances of environmental regulations.

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