Optimization of combined heat and power (CHP) market allocation: The case of Poland

Combined heat and power (CHP), that is production of electricity and useful heat in a single thermodynamic process, is a way of primary energy saving and emission reduction. Therefore, promotion of the electricity from high-efficiency cogeneration (CHP-E) was encouraged in the European Union. However, CHP-E promotion mechanisms proved low effectiveness in certain countries, like Poland, where the prices of certificates of origin were kept at relatively low levels. This paper attempts to analyse the effect of CHP-E support system on the market allocation of different cogeneration technologies. MARKAL model of Polish power system was applied to calculate the installed capacity and annual electricity production from cogeneration plants in time perspective to 2030. The impact of buy-out fee and resulting shadow prices of certificates on the market share of CHP-E and the technology choice was studied. The convergence of promotion mechanisms for CHP-E and electricity from renewable energy sources (RES-E) was also investigated.