Thermoelectric Power Plants in the Deregulated Electricity Market: Electricity Production Costs and Sales Revenues Evaluation Model

The Italian deregulated electricity market is based on a competitiveness mechanism which rewards power generation plants characterized by high flexibility, availability and reliability. In this framework power plants have to fit their production schedules to the demand curve taking into account the electricity price variability during the day. As a consequence, electricity production revenues depend not only on the generated energy quantities but, above all, on the time when the energy is yielded to the power grid and on the plant response time to the electricity generation request. Combined cycle power plants, characterized by high flexibility and reduced startup and shutdown times, are suitable for operating in the electricity market; on the other hand, steam power plants, which have been designed for base load operating conditions, have to improve their flexibility in order to be competitive. The present paper is focused on the model that has been developed in order to evaluate electricity production costs and revenues for two thermoelectric units, a combined cycle power plant and a steam power plant, which operate in the Italian electricity market. The paper outlines the main advantages and disadvantages of operating a combined cycle or a steam power plant and analyses the main results of the model considering different operating scenarios.