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Planning model for the development and
construction of thermal power plants using
alternative fuels with optimal investment
distribution
Nadiia Yushchenko1,*
1Khmelnytskyi National University, 11 Instytuts`ka str., 29016 Khmelnytskyi, Ukraine
Abstract. The work is devoted to the analysis of the current state and
prospects of modernization of the fuel and energy complex and
investments in renewable energy in order to achieve the Sustainable
Development Goals in Ukraine, adaptation of an economic and
mathematical model adequate to this process, allowing for rational
distribution of investments, which in Ukraine plans to attract to
development of the energy system and renewable energy as part of the
implementation of the strategy “Vectors of Economic Development 2030”,
the collection of potential sources of funds for the development and
construction of thermal power plants using alternative fuels on the basis of
existing heat supply enterprises in Ukraine. In the article it is
recommended to use the add-in “Search for a solution” MS Excel for
performing calculations according to the proposed deterministic model of a
partially integer linear programming problem with boolean variables. As a
result of the implementation of the proposed approach, moderate protection
of the main producers (network operators) – heat supply utilities will be
provided and market conditions for independent producers will be created,
the operator will be encouraged to increase the efficiency of its own
production.
1 Introduction
Energy today is the largest industry in the world and an industry that is experiencing an
unprecedented breakthrough in our era, when there is an exponential explosive (non-linear)
growth in renewable energy. The energy singularity will come when renewables displace
fossil fuels and provide almost all the energy for our civilization [1].
Ensuring shared access to affordable, reliable and modern energy by 2030, significantly
increasing the share of renewable energy in the global energy mix, doubling the global rate
of improvement in energy efficiency, encouraging investment in energy infrastructure and
clean energy technologies, expanding infrastructure and modernizing technologies for
modern and sustainable energy supply in developing countries, taking into account their
* Corresponding author: nadezhda15yu@gmail.com
E3S Web of Conferences 255, 01007 (2021)
ISCMEE 2021
https://doi.org/10.1051/e3sconf/202125501007
© The Authors, published by EDP Sciences. This is an open access article distributed under the terms of the Creative
Commons Attribution License 4.0 (http://creativecommons.org/licenses/by/4.0/).
respective support programs, are the main objectives of Goal 7 of the global Strategy for
Sustainable Development until 2030 [2 , pp. 20-21 ].
In accordance with the Monitoring Report [3] developed by the State Statistics Service
of Ukraine with the support of UNICEF in Ukraine, containing information on the status of
achieving the Sustainable Development Goals by national SDG indicators [4] during 2015-
2019 (Table 1) most of the electricity in Ukraine, except for nuclear power plants (52-
56%), was produced by thermal power plants (29-32%). The share of alternative energy
sources increased from 1% in the total production in 2015 to 4% (5.5 billion kWh) in 2019.
Table 1. Dynamics of the structure of electricity production in Ukraine.
2015
2016
2017
2018
2019
billion
kWh
%
billion
kWh
%
billion
kWh
%
billion
kWh
%
billion
kWh
%
Electricity
production,
total
157.7 100 154.8 100 155.4 100 159.4 100 154.0 100
including
Condensing
power plants of
generating
companies
49.4 31 49.9 32 45.0 29 47.8 30 44.9 29
Тhermal power
plants (TPP) &
cogeneration
units
6.1 4 6.7 4 10.9 7 11.0 7 10.9 7
Hydraulic
power plants
5.2 3 7.5 5 9.0 6 10.4 7 6.5 4
Hydroelectric
power plants
1.6 1 1.6 1 1.6 1 1.6 1 1.3 1
Nuclear power
plants
87.6 56 81.0 52 85.6 55 84.4 53 83.0 54
Blockstations
6.2
4
6.6
4
1.5
1
1.5
1
1.8
1
Alternative
energy sources
(wind power
plants, solar
power plants,
biomass)
1.6 1 1.6 1 1.9 1 2.6 2 5.5 4
Source: compiled by the author based on data [3, p. 42]
Reduce the carbon footprint of the fuel and energy complex, attract $10 billion in
investments in renewable energy, reduce the share of coal generation, ensure an increase in
the share of biomass in heat production up to 30%, form the share of generation from
renewable energy sources in total electricity production at 25% – these are the strategic
goals of the “Energy” direction of the National Economic Strategy 2030 [5].
The share of energy generated from renewable sources in total final energy consumption
in 2019 compared to 2015 increased by 62% (Fig. 1), but below the target of 11% set for
2020, by 26% despite on the fact that increasing the share of energy from renewable
sources in the national energy balance, in particular by introducing additional capacities of
facilities that generate energy from renewable sources, is task 7.3 of Sustainable
Development Goal 7 for Ukraine [6]. With a 90% probability, it can be argued that in 2021,
while maintaining the emerging trend described by the polynomial model of the 2nd
degree, the share of energy produced from renewable sources in the total final energy
consumption in Ukraine will be at least 8.8% but will not exceed 9.9%.
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Fig. 1. Dynamics of the share of energy produced from renewable sources in the total final energy
consumption in Ukraine.
Physically and morally obsolete fixed assets and technologies, renewing at an extremely
slow pace, negatively affect the performance of functioning, the quality and cost of utilities,
lead to cost overruns of resources at all stages of production, transportation and delivery to
end users. Losses from energy conversion in Ukraine reach 38471 thousand tons of oil
equivalent (accounting for 41% of the total energy supply). Losses during transportation
and distribution of electricity – 14.8% and heat energy – 14.05%, which is associated with
the critical state of the infrastructure for transportation and distribution, as well as its
technological structure, designed for a significantly larger volume of consumption [5].
According to the Ministry of Development of Communities and Territories of Ukraine, heat
losses in heating networks (data are being developed since 2020) reach 20.4% [3].
The rapid growth of renewable energy sources and a high level of wear and tear of
thermal generation (stations have worked for an average of 50 years, a significant part of
the infrastructure of thermal communal energy, heating networks has significantly
exhausted its resource and is in an emergency state) in Ukraine leads to a reduction in a
large number of power units TPP. To develop a set of methodological, scientific, technical
and organizational foundations for a significant improvement of territorial heat supply
systems and its practical application for: ensuring the stable and reliable functioning of
communal heat power engineering with the supply of heat to consumers in the required
quantity and proper quality for hot water supply and heating, taking into account domestic
operating conditions equipment; replacement and savings at housing and communal
services enterprises of up to 30% of natural gas relative to the basic costs in the first 5 years
with a payback period of the proposed newest technological and technical measures up to
4-5 years; the use of mainly domestic modern devices and only in the absence of them –
foreign ones; replacement of outdated equipment, provided that it is impossible to increase
the efficiency of its use with the help of modern technologies; the functioning of centralized
and individual heat supply systems with the priority development of the first, the State
target program for the modernization of communal heat power engineering was focused [7].
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2 Methods
The adoption of rational and effective management decisions is impossible without a
comprehensive analysis of the complex of interdependent factors, determination and
comparative assessment of possible alternatives and acceptable action plans. Modeling is
the only way so far to establish the potential consequences of alternative solutions, allowing
them to be objectively compared, as well as to see options in perspective. The use of
modern information technologies and economic and mathematical models and methods that
simultaneously take into account all economic and physical conditions and find the best
option during the modernization of energy facilities in Ukraine can become one of the
components of the formation of a support system for the implementation of the latest
regulation systems to ensure the development of the energy sector of Ukraine in the context
of a circular economy and waste management, will ensure that decisions are made in favor
of energy supply systems that are most beneficial for ensuring energy consumption in terms
of safety, reliability, quality of energy supply and provision of energy services that are
affordable and attractive in terms of environmental impact.
Scientific research F. Alobaid, N. Mertens, R. Starkloff, C. Heinze, B. Epple [8] and
other scientists are devoted to the development of dynamic modeling of thermal power
plants. R. de Freitas, E. Vogel, A. Korzenowski and L. Oliveira Rocha [9] a probabilistic
model for supporting decision-making regarding investments in renewable energy was
created. The work of E. Spyrou, B. Hobbs, M. Bazilian and D. Chattopadhyay [10] focuses
on planning energy systems in fragile and conflict-affected states. A series of studies
focused on the development of mathematical models of subsections of thermal power plants
was carried out by A. Ghaffari, A. Chaibakhsh, S. Shahhosseini [11]. However, further
formation and development requires economic and mathematical decision support tools for
complex systems and capital-intensive projects, which allow the subject of management to
increase the efficiency of decision-making through modeling and automation of
information procedures.
The main goal of this work is to analyze the current state and prospects of modernizing
the fuel and energy complex and investments in renewable energy to achieve the
Sustainable Development Goals in Ukraine, adapting an economic and mathematical model
that is adequate to this process, allowing for a rational distribution of investments, as well
as collecting potential sources of funds for development and construction of thermal power
plants using alternative fuels on the basis of existing heat supply enterprises in Ukraine.
3 Results
On the path of further development and implementation of European legislation in Ukraine,
the policy of the state, relevant ministries, local authorities and manufacturers should be
aimed at implementing Directive 2012/27EU [12] on the development of highly efficient
cogeneration and efficient district heating and cooling from waste heat and renewable
energy sources. Even in the future, there is no talk of a complete refusal of thermal
communal energy from the use of natural gas. We can talk about its partial replacement by
another energy carrier, which would be cheaper than gas, available for use and
inexhaustible from the point of view of predetermined volumes of use. Such as, for
example, waste from the timber processing industry, agriculture and the agro-industrial
complex or garbage from landfills in Ukraine, the calorific value of 1 ton of which is about
1.6 Gcal/ton [13], the processing of which will solve two problems at once: environmental
(sorting and disposal of household waste) and energy (actually a source of non-fossil
energy and reducing the cost of heat tariffs).
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The use of alternative fuels (co-processing) saves huge reserves of gas and coal, as well
as reduces CO2 emissions. Moreover, Ukraine has set a stimulating tariff for heat “not from
gas”, as well as one of the world's highest “green” tariffs for electricity from biomass and
biogas, namely 12.4 eurocents/kWh.
Among the advantages of waste disposal, the following should be noted. First, the
energy utilization of waste will allow to reduce the area of landfills, where the main volume
of the so-called “tailings” – the remains of municipal waste after the extraction of useful
fractions from them – is now received. Secondly, energy utilization is the ability to utilize
waste that is unsuitable for recycling. In addition, there are negative health and
environmental impacts from recycling certain types of waste [14].
Efficient District Heating and Cooling – a district heating or cooling system that uses a
minimum of 50% renewable energy, 50% waste heat, 75% heat from cogeneration, or a
50% combination of such energy and heat.
The construction of a TPP or mini TPP on waste is an excellent solution that will allow
using waste from all enterprises of the woodworking industry (pulp and paper mills,
plywood, sawmills), as well as agricultural and livestock waste as fuel.
The most promising and economically feasible step in Ukraine is the construction of a
TPP using alternative fuels based on existing heat supply enterprises. This approach will
make it possible to protect utilities from new independent producers in the area of TPP and
maintain their position in the market [15].
To solve this problem, it is necessary to take into account all possible options for the
development of existing enterprises, as well as available projects for the introduction of
new enterprises. The choice of specific options for the development and placement of
enterprises is carried out taking into account the volume of investment resources that can be
used to support and increase production capacity. The criterion of optimality can be the
requirement to minimize the necessary total aggregate investment costs, costs of
manufacturing products and their transportation to consumers [16].
The economic and mathematical model of the problem of planning the development and
construction of TPPs using alternative fuels based on existing heat supply enterprises with
an optimal distribution of investment resources has the form:
=
+
+
(1)
= 1
,= 1;
,
,
0 ,= 1;
,= 1;
,
=
,= 1;
,
,= 1;
,
(2)
{0; 1},= 1;
,= 1;
, 0, = 1;
,= 1;
, (3)
where the known quantities (uncontrollable parameters) are:
– company number, existing or projected (= 1;
);
– number of the development variant of the -th enterprise (= 1;
);
– production capacity of the -th enterprise, subject to its development according to the
-th option;
– investment costs required for the implementation of the -th development option at the
-th enterprise;
– the maximum possible amount of investment costs that will be aimed at ensuring the
development of all enterprises;
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– standard coefficient of economic efficiency of investments (discount rate);
– the cost of a unit of production produced at the -th enterprise, subject to its
development according to the -th option;
– product consumer number (= 1;
);
– demand for products from the -th consumer;
– costs of transporting a unit of production along the route from the -th enterprise to
the -th consumer.
Unknowns are:
– logical variable reflecting the fact of the choice for the implementation of the -th
development option of the -th enterprise
=1if the -th enterprise will develop on the -th variant,
0otherwise;
– the volume of production at the -th enterprise in accordance with the -th variant of
its development;
– the volume of transportation of products along the route from the -th enterprise to the
-th consumer;
– total aggregate costs of investment, production and transportation of products.
The above mathematical model is a partially integer linear programming problem with
boolean variables. It can be solved using the “Search for a solution” add-on of the MS
Excel package for the implementation of deterministic models, including an analysis of the
sensitivity of the solution to changes in the restrictive conditions.
Increasing the efficiency of their own heat-generating capacities, introducing more
efficient technologies, switching to cheaper energy sources and types of fuel can be a
worthy response from district heating utilities to the emergence of competition. Obviously,
this will not happen in a year or two, but in the future it should happen, which is confirmed
by the experience of introducing such systems in a number of European countries.
The introduction of alternative energy sources at the present stage of Ukraine's
development is hampered by the high cost of design and equipment for the development of
alternative energy sources, the development of alternative energy, which is completely
dependent on imported equipment, the lack of proper regulatory framework for the
development of the renewable sources market, corruption influence monopolies hindering
the development of the investment market for clean technologies.
4 Discussion
Certain preconditions have been created in Ukraine for attracting funds from international
financial, credit and donor organizations in order to successfully reform and modernize the
housing and communal services and its infrastructure in cities. At the same time, the weak
activity of municipalities, low executive discipline, administrative barriers and a high level
of corruption impede the implementation of these projects at the proper level, despite the
significant number of international donors and financial institutions in the system of
financing capital projects in the field of housing and communal services. According to the
National Institute for Strategic Research, the total disbursement rate for projects averages
30%, and the deadlines for the implementation of most projects are 2020 and 2021. At the
end of these terms, projects will be completed and unselected funds will be canceled [17].
The main direction of state policy in the direction of implementing measures aimed at
energy conservation, energy efficiency and obtaining energy from alternative sources in
Ukraine should be the creation of a comprehensive, consistent and flexible system of
financial incentives.
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In the context of the decentralization reform, municipalities received additional rights
regarding the organization of heat and energy supply systems, as well as financial
instruments for their modernization. Provided that the management of public utilities is
efficiently organized, this allows for a gradual transition to systems that have demonstrated
high efficiency in European countries. The defining principles of their functioning is the
role of municipalities planning the development of heat supply in urban agglomerations,
contributing to the development of various forms of municipal-private partnerships to
attract innovative investment in the industry, exercising control and coordination of the
development of district heating systems and, in most cases, holding a controlling stake
shares of corporate participants in the local heat supply market, which guarantees the rights
of consumers to high-quality and uninterrupted services.
The formation of a modern industrial base for behavior with waste should be not only an
important component of state and regional environmental policy, but also one of the
priorities for decentralization of power and reform of local self-government.
Recycling waste in the direction of improving the quality of life and caring for the
environment is not cheap, therefore, within the framework of international technical
assistance, Ukraine should also consider the issue of its reorientation from research to
increasing the investment share and environmental conversion of a part of external debt
(debt-for-environment swap [18, pp. 113-114]), since Ukraine, after signing the Association
Agreement with the EU [19], must implement the norms of European legislation, which
requires an increase in funding. Environmental conversion provides for the possibility of
transforming part of the obligations on the external public debt into the country's
obligations to finance environmental protection measures on its own territory in the
national currency for an agreed amount. This eco-conversion was carried out in Poland,
Bulgaria and other countries.
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