Abstract
Abstract The global transition to sustainable energy systems presents a critical challenge, particularly for regions such as Cyprus, which remain heavily dependent on conventional fuels. This study examines the reduction of economic costs and environmental impacts through the optimal management of power generation units and the utilization of natural gas (NG) and hydrogen in electricity production, while also considering the integration of renewable energy sources (RES). Based on actual production data from 2014 to 2023, the analysis focuses on two distinct periods: 2014–2019 and 2020–2023, with the latter characterized by rising fuel costs and greenhouse gas (GHG) emissions. Three power generating units availability scenarios (100%, 65%, and 58%) were developed with and without NG, and economic savings were evaluated through simulations implementing efficient unit commitment (UC) strategies. The findings indicate that UC strategies can achieve annual cost reductions ranging from 3 to 11.2%, while the use of NG at a competitive price of €450/ton further increases savings to 11.6–40.8%. Conversely, higher prices (€640/ton) lead to cost escalations, underscoring the necessity for price regulation. Assuming a predefined hydrogen to natural gas mass ratio of 20:80, the introduction of hydrogen reduces GHG emissions by 61–62%, aligning electricity production with the European Green Deal’s net-zero emissions targets. Furthermore, the study quantifies cost savings from CO₂ emission reductions through hydrogen integration and defines price thresholds for NG and hydrogen, supporting a cost-effective, carbon-neutral transition and strengthening the supporting regulatory and policy framework.