Value of the interconnectors in the Nordic countries

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Value of the interconnectors in the Nordic countries

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Value of the interconnectors in the Nordic countries

  1. 1. Value of the interconnectors in the Nordic countries Jacopo Tattini PhD Student at Energy System Analysis Group System Analysis Division DTU Management Engineering Maurizio Gargiulo E4SMA
  2. 2. DTU Management Engineering, Technical University of Denmark Agenda • Background • TIMES-NordPool • Analysis of power trade in the Nordic countries • Analysis of grid expansion possibilities • Sensitivity analysis on effect of no grid expansion • Conclusions 2 19 November
  3. 3. DTU Management Engineering, Technical University of Denmark Agenda • Background • TIMES-NordPool • Analysis of power trade in the Nordic countries • Analysis of grid expansion possibilities • Sensitivity analysis on effect of no grid expansion • Conclusions 3 19 November
  4. 4. DTU Management Engineering, Technical University of Denmark Background: Nord Pool market 4 19 November Nord Pool: power trading market of Nordic and Baltic countries. The auctioning countries are divided into bidding areas linked with interconnectors controlled by the TSOs. If the power flows between the bidding areas exceed the interconnectors transmission limit, grid congestion occurs. Bottlenecks in the interconnectors lead to different prices in the various areas composing the Nordic electric system.
  5. 5. DTU Management Engineering, Technical University of Denmark Benefits of interconnectors capacity expansion Interconnectors are one of the main power price drivers in the Nordic countries Interconnectors are essential for the integration of variable power sources Interesting to assess their role and their influence on the power trade 5 19 November Source: L’ Abbate et al. (2011)
  6. 6. DTU Management Engineering, Technical University of Denmark Agenda • Background • TIMES-NordPool • Analysis of power trade in the Nordic countries • Analysis of grid expansion possibilities • Sensitivity analysis on effect of no grid expansion • Conclusions 6 19 November
  7. 7. DTU Management Engineering, Technical University of Denmark TIMES-NordPool TIMES-NordPool: represents the Norwegian, Swedish and Finnish power and thermal systems. Purposes: • To be run together with TIMES-DK to better simulate power trade processes • Exploring the future power exchange between the Nordic countries under different assumptions • Assessing transmission capacity expansion under different scenarios 7 19 November
  8. 8. DTU Management Engineering, Technical University of Denmark TIMES-NordPool: Spatial resolution • Multiregional model: Each country = One region • Interconnectors between Norway, Finland and Sweden implemented as endogenous trade processes • Interconnectors between Nordic countries and neighboring countries implemented as exogenous trade processes 8 19 November Power prices and volumes endogenously optimized Power volumes calculated according to price related criteria
  9. 9. DTU Management Engineering, Technical University of Denmark TIMES-NordPool: Hard-linking with TIMES-DK 9 19 November TRADE TIMES-NordPool TIMES-DK All interconnections between Nordic countries as endogenous processes
  10. 10. DTU Management Engineering, Technical University of Denmark TIMES-NordPool: Time structure • Same 32 time slices as TIMES-DK The models are consistent • Base Year: 2010 • Time horizon: 2010-2050 10 19 November
  11. 11. DTU Management Engineering, Technical University of Denmark Agenda • Background • TIMES-NordPool • Analysis of power trade in the Nordic countries • Analysis of grid expansion possibilities • Sensitivity analysis oneffect of no grid expansion • Conclusions 11 19 November
  12. 12. DTU Management Engineering, Technical University of Denmark Assumptions for the analysis All analyses on the power trade between the Nordic countries have been performed using TIMES-NordPool hard-linked to TIMES-DK. Baseline scenario considers: • DKW and DKE: power and thermal system fossil free by 2035, entire energy system fossil free by 2050 • NOR, FIN, SWE: no environmental constraints (NETP Carbon Neutral scenario is implemented but not activated) 12 19 November
  13. 13. DTU Management Engineering, Technical University of Denmark Transmission grid in the base year 13 19 November Base year Source: ENTSO-E (2012) High integration of power systems
  14. 14. DTU Management Engineering, Technical University of Denmark Transmission grid expansion 14 19 November Exogenous grid expansion Source: ENTSO-E (2014) Starting grid +
  15. 15. DTU Management Engineering, Technical University of Denmark Power generation in 2050 15 19 November Solar 35% Wind Onshore 65% DKE Solar 18% Wind Onshore 82% DKW Coal 9% Hydro 57%Natural Gas 4% Wind Offshore 17% Wind Onshore 13% NOR Biomass 4% Coal 19% Hydro 56% Wind Offshore 11% Wind Onshore 6% Nuclear 4% SWE Biomass 8% Coal 42% Hydro 13% Wind Offshore 12% Wind Onshore 3% Nuclear 22% FIN
  16. 16. DTU Management Engineering, Technical University of Denmark Electricity prices in 2050 16 19 November
  17. 17. DTU Management Engineering, Technical University of Denmark Power trade between Norway and Denmark in 2050 17 19 November Trade is ongoing: • Until marginal costs equal • Until congestion occurs P o w e r p r i c e P o w e r f l o w
  18. 18. DTU Management Engineering, Technical University of Denmark Price convergence Between 2010 and 2020 about 7.5 GW of new transmission lines are installed 18 19 November ..less congestions
  19. 19. DTU Management Engineering, Technical University of Denmark Agenda • Background • TIMES-NordPool • Analysis of power trade in the Nordic countries • Analysis of grid expansion possibilities • Sensitivity analysis on effect of no grid expansion • Conclusions 19 19 November
  20. 20. DTU Management Engineering, Technical University of Denmark Analysis of grid expansion • Uncertainty on grid expansion after 2020 • Endogenous optimization of grid expansion • Possible new interconnectors from ENTSO-E in Ten-Year Network Development Plan 2014 (TYNDP) • Constraint on starting year, no on transmission capacity 20 19 November
  21. 21. DTU Management Engineering, Technical University of Denmark Uncertainty on costs of future interconnectors Sensitivity analysis with interconnectors costs: under which cost condition the interconnectors are built? 21 19 November Low Medium High k€/MW INVCOST O&M INVCOST O&M INVCOST O&M NOR-SWE 190 0.4 310 0.7 440 1.0 NOR-FIN 600 1.4 1000 2.3 1400 3.2 SWE-FIN 56 0.1 91 0.2 130 0.3 DKW-DKE 430 1.0 725 1.6 1020 2.3 DKW-SWE 560 1.3 930 2.1 1300 2.9 SWE-GER 260 0.6 429 1.0 600 1.4 SWE-LAT 300 0.7 500 1.1 700 1.6 NOR-HOL 1033 2.3 1721 4.0 2410 5.4 Source: ENTSO-E (2014)
  22. 22. DTU Management Engineering, Technical University of Denmark Endogenous grid expansion: sensitivity analysis 22 19 November Low interconnectors costs Medium interconnectors costs High interconnectors costs Exogenous power prices not consistent
  23. 23. DTU Management Engineering, Technical University of Denmark Agenda • Background • TIMES-NordPool • Analysis of power trade in the Nordic countries • Analysis of grid expansion possibilities • Sensitivity analysis on effect of no grid expansion • Conclusions 23 19 November
  24. 24. DTU Management Engineering, Technical University of Denmark Sensitivity analysis: only existing interconnectors How does the Nordic power system react to a changeless transmission grid? Only interconnectors existing or under construction by 2015 are considered 24 19 November Region Average relative price increase Average absolute price increase (€/MWh) Price relative stnrd dev increase DKE 7% 3.4 59% DKW 1% 0.5 64% FIN 1% 0.5 53% NOR 9% 3.9 88% SWE 12% 4.8 87% Most penalized country
  25. 25. DTU Management Engineering, Technical University of Denmark Agenda • Background • TIMES-NordPool • Analysis of power trade in the Nordic countries • Analysis of grid expansion possibilities • Sensitivity analysis on effect of no grid expansion • Conclusions 25 19 November
  26. 26. DTU Management Engineering, Technical University of Denmark Conclusions TIMES-NPM hard-linked to TIMES-DK allows: • Calculating endogenously the power prices and volumes between Denmark and the rest of the Nordic countries  Limiting the risk of the assumptions on the exogenous trade processess for the Danish interconnectors • Optimizing endogenously the transmission grid expansion • Assessing for the Nordic interconnectors the cost thresholds within which they are feasible • Assessing for each Nordic country the average increase of power prices if the planned interconnectors are not built 26 19 November
  27. 27. DTU Management Engineering, Technical University of Denmark27 19 November Jacopo Tattini jactat@dtu.dk http://www.sys.man.dtu.dk/Research/Energy-Systems-Analysis/PhD-projects

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