Economic comparison of new built internal combustion gas engine power plant in Uzbekistan and Europe based on levelized cost of electricity (LCOE) method

Abstract

Fossil fuels have been dominated the energy market for long time and nowadays it is planned to phase out fossils in the road of energy transition. Since first discover of oil and gas they have been used mostly as energy source and used in many other sectors such as petrochemical sector, textile sector etc. Climate change and global warming are hot topics in this era and these topics are becoming more important for humanity. To have better world emissions which mostly released from fossils should be reduced. In this study economic analysis of new built power plant in Uzbekistan has been investigated. Comparison of new built gas fired power plants with gas engines have been made between Europe and Uzbekistan. Most of the data have been used from Danish Energy Agency Technology Data. By this study a comparison tool between different power technologies have been made. In today's business world, where fast decision-making is critical, businesses operate. Especially in the energy sector, the importance of making the right decisions becomes even more significant for entrepreneurs to succeed. Power plants are fundamental investments for businesses, representing a long-term commitment. Therefore, selecting the right machinery for power plants is crucial for the success of the operation. Should a new machine or a second-hand one be purchased for use in the power plant? This question is a crucial decision point for entrepreneurs. Besides making the right decision, ensuring the continuity of operations, and securing a competitive advantage in the long term is also critical. While this decision is made by the business owner, it requires the evaluation of different scenarios and the preparation of an analytical report to make the right decision. This thesis serves as a tool to facilitate the decision-making process for entrepreneurs by examining different scenarios and analyzing them with a calculation algorithm that includes factors like LCOE (Levelized Cost of Electricity). The report helps entrepreneurs conduct cost-effectiveness analyses, mitigate risks, and improve the performance of the power plant. Additionally, by considering long-term benefits, the report aids in shaping the business's long-term strategies. This thesis is a tool designed to facilitate the decision-making process for entrepreneurs by analysing different scenarios with a calculation algorithm that includes LCOE. The report helps entrepreneurs conduct cost-effectiveness analysis, reduce risks, and enhance the performance of the power plant. Additionally, by considering long-term benefits, the report aids in shaping the company's long-term strategies. The future structure of the European energy market is likely to exhibit a balanced mix, comprising substantial renewable energy production capacity alongside a sufficient number of gas-fired power plants designated for grid balancing purposes. This strategic approach will facilitate Europe's achievement of its sustainability objectives while simultaneously ensuring energy security and economic stability. By adopting a diversified energy portfolio, Europe can enhance its resilience against external shocks, whether they arise from fluctuations in global energy markets or geopolitical developments. Conversely, when considering Uzbekistan, it is vital to acknowledge its unique statistical and geographical context. Situated in Central Asia, Uzbekistan is gaining prominence in the global energy market due to its strategic location and substantial natural gas reserves. The country's geographic positioning offers significant advantages for energy trade, facilitating connections with neighboring regions and providing access to broader markets. Moreover, Uzbekistan's historical stability in fuel prices has contributed to a more predictable investment landscape, which is particularly appealing to both domestic and foreign investors. Unlike many other regions, Uzbekistan's fuel prices have historically demonstrated less volatility, fostering a more stable investment environment. This stability, combined with the country's abundant natural gas resources, suggests that investment scenarios in Uzbekistan carry lower risk compared to other regions. As a result, investors may find Uzbekistan an attractive option for energy projects, particularly in the natural gas sector. The country's focus on optimizing its natural gas infrastructure and leveraging its resources effectively positions it as a significant player in the regional energy market. While Europe is poised to transition toward a more sustainable energy future, Uzbekistan presents a contrasting scenario that highlights the advantages of stable fuel prices and robust natural gas reserves. This dichotomy underscores the need for tailored energy policies and investment strategies that align with the specific contexts of each region. By recognizing and addressing the unique challenges and opportunities within their respective energy landscapes, both Europe and Uzbekistan can work toward achieving their energy goals while fostering economic growth and sustainability. Given these conditions, Uzbekistan is well-positioned to continue leveraging its natural gas reserves for electricity generation in the near to medium term. This reliance on domestic natural gas resources allows the country to maintain an affordable and reliable energy supply. However, it is crucial for Uzbekistan to consider gradually diversifying its energy portfolio by investing in renewable energy sources. Such diversification would not only enhance energy security but also align Uzbekistan with global energy transition trends, positioning it favorably in the international energy market.