Initial Market Modelling and Simulation Results

2021
VPP Enerģētika projekts FutureProof, Antans Sauļus Sauhats, Ļubova Petričenko, Romāns Petričenko, Kārlis Baltputnis, Zane Broka

Based on FutureProof reports D1.1, D1.2 and D2.1, this deliverable D3.1 provides the initial results of modelling-based assessment of the future development of the electricity market in the Baltic states. The document has five main chapters. The first chapter gives a brief overview regarding the power systems of the Baltic states and their neighbouring countries and the expected future developments, focusing on issues that can have the most profound impact on the operation of the electricity market, such as, cross-border interconnections. The second chapter offers details on the implementation of Regional Power System Model (RPSM) used in obtaining the presented results. It is a bespoke modelling tool which employs a number of in-house models developed at RTU. The main components of RPSM are implemented in MATLAB, taking advantage of its provided solvers (e.g. for linear programming), while data input/output is realised with .xlsx files. The third chapter describes the input data used for market modelling, as well as the main assumptions and RES development scenarios for 2030, 2040 and 2050. It also contains information on the processing of forecasts necessary in model input, e.g. annual average value forecasts of various parameters are transformed into timeseries with hourly resolution using a Fourier transformation approach. However, the main part of the third chapter is devoted to presenting and analysing the modelling results for the Baltic power system. The metrics of interest are the physical imbalances of the Baltic power system under various conditions, CO2 emissions from electricity production, and the electricity trade balance (from import and export). The fourth chapter, however, is devoted specifically to the Latvian power system, assessing its balance situation and emissions in three subscenarios with varied RES share. Finally, the fifth chapter assesses the foreseeable profitability of RES power plant projects in Latvia under electricity market conditions. The technical and financial assumptions used for the analysis are provided. Two alternative electricity market price estimation methods are used, one based solely on forecasts, while the other taking into account the merit-order (i.e. price reducing) effect of additional RES. The financial feasibility of RES development is analysed using traditional indicators, like NPV, IRR and payback period. Moreover, sensitivity analysis for capital and maintenance costs, and discount rate is presented. The conclusions reveal that in some of the modelled market scenarios in certain instances the demand cannot be fully covered even by activating full reserve capacities. This reveals a major capacity adequacy risk which must be remedied. On the other hand, the study of RES power plant profitability shows that their development for operation in the electricity market can be economically feasible, with wind projects appearing to be notably more profitable than commercial large-scale PV projects. The latter would need state support to ensure feasibility in the electricity market conditions in Latvia. However, the results obtained show large sensitivity to key cost and financing assumptions. Chronologically, the results of D3.1 precede and feed into the modified scenarios assessed in both D1.3 and D3.2.

Keywords
elektroenerģijas tirgus; modelēšana; optimizācija; scenāriji; prognozes; atjaunīgie energoresursi; rentabilitāte

Sauhats, A., Petričenko, Ļ., Petričenko, R., Baltputnis, K., Broka, Z. Tirgus modelēšana un imitācija: sākotnējie rezultāti: Valsts pētījumu programma “Enerģētika”, projekts “FutureProof” VPP-EM-INFRA-2018/1-0005. Rīga: Rīgas Tehniskās universitāte, 2021. 51 p.

Publication language
Latvian (lv)