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Today’s electrical energy landscape is characterized by new challenges such  as deregulation, liberalization of energy markets, increased competition,  growing demands on security of supply, price insecurities, and demand to cut  CO2 emissions. All mentioned challenges are calling for consideration of  various options (like nuclear, coal, gas or renewable scenarios) and for  better understanding of energy systems modelling in order to optimize proper  energy mix. Existing models are not sufficient any more and planners will  need to think differently in order to face these challenges. European  emission trading scheme (EU ETS) started in 2005 and it has great influence  on power system short term and long term planning. Croatia is obliged to  establish a national scheme for trading of greenhouse gas emission allowances  from the year 2010, which will be focused on monitoring and reporting only  until accession to EU when it will be linked with EU ETS. Thus, for Croatian  power system it is very important to analyze possible impacts of CO2  emissions. Analysis presented in this paper was done by two different models:  mathematical model, based on short run marginal costs (SRMC, relevant for  fuel switch in existing power plant and merit order change) and long run  marginal costs (LRMC, relevant for new investment decisions); and electricity  market simulation model PLEXOS, which was used for modelling Croatian power  system during development of the Croatian energy strategy in 2008. Results of  the analysis show important impacts that emission trading has on Croatian  power system, such as influence of emission price rise on price of  electricity and on emission quantity, and changes in power plants output that  appear with emission price rise. Breakeven point after which gas power plant  becomes more competitive than coal is 62 €/tCO2 for SRMC and 40 €/tCO2 for  LRMC. With CO2 prices above 31 €/tCO2 wind is more competitive than gas or  coal, which emphasizes importance that emission price has on competitiveness  of renewables.

Modelling CO2 emissions impacts on Croatian power system