Market Modelling and Simulation: Updated Results

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

This report (D3.2) finalizes WP3, summarizing the final results obtained from electricity market modelling exercises performed during the FutureProof project. It assesses Baltic power system development scenarios through the lens of the impact on electricity import/export, market flows and resulting clearing prices, which are the major factor influencing end-user costs for electricity. Report D3.2 was prepared concurrently to D1.3 (which is focused more on generation adequacy issues) and thereby utilizes the same key assumptions, forecasts and modified power system development scenarios. There are three main chapters in the deliverable. The first chapter provides overview of the main modelled scenarios (focusing on 2050), as well as the additional scenarios and analysed sensitivities. The second chapter presents results obtained with the RPSM approach. The trade balance in two RES capacity scenarios is compared, finding that while significantly increasing the share of RES does allow to reduce import costs and increase export revenues, it is very hard for the Baltic states to achieve a positive trade balance. The second chapter describes the results obtained with an optimization model created in the Spine Toolbox (and its SpineOpt environment). Market price calculation in this instance is carried out during the post-processing of unit commitment results. The price is identified by considering the production cost of the marginal generating unit, which is found by constructing the merit order list of all activated electricity sources for each of the modelled hours in the year. Unlike RPSM, the model implemented in SpineOpt also allows for energy transit flows (i.e. using the Baltic states as a trade corridor if the market situation in the region calls for it). As a result, the modelled total import and export volumes are expected to be higher, while the trade balance should be comparable to RPSM results. Result comparison confirms this expectation. Since the main results obtained by both approaches are ultimately similar, additional calculations exceeding the base scenarios and sensitivity analyses are performed with only the SpineOpt model due to its suitability for concurrent multi-scenario computation. Compared to the sensitivity analyses in D1.3, this report also considers the impact of reserve power plant activation costs and market price ceiling, which alternatively could also be interpreted as the cost of extraordinary measures, like load-shedding due to temporary capacity inadequacy. The conclusions drawn show that while interconnections are paramount in ensuring acceptable electricity price levels, in some instances, they can increase the market clearing price in the Baltic region (i.e. when due to significant local RES production they become electricity exporters). On the other hand, various storage development scenarios show that there is likely a limit on the useful development of short and medium-term energy storage projects in the region before the additional system wide benefits become miniscule. The seasonal characteristics of both wind and more so solar power production show that long-term storage might be more useful in the future, provided that it can be developed with reasonable costs. Additionally, demand sensitivities expose that gradual increases in consumption lead to similarly gradual average market price increments, but cause major jumps in the annual peak price periods. Other conclusions point to PV development leading to notably less price reducing effect than comparable wind power projects, however, also for wind capacity there is a point of saturation whereby additional increments provide minor effect on price stability, likely due to the weather-dependent nature of wind production. Still, ultimately, RES capacity expansion provides a pathway for (on average) lower electricity prices. On the other hand, reducing the price levels too low can become a hindrance for new RES development, thereby this is an issue where balance must be found. As D3.2 is the last report of the FutureProof project in regard to energy market issues, it also includes a subchapter at the end providing brief summaries of the scientific articles published by the project team during the implementation of WP3, pointing out the main implications which can be useful in policymaking decisions relating to a number of electricity (including balancing and ancillary services) and district heat market development issues.

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

Petričenko, R., Petričenko, Ļ., Baltputnis, K., Broka, Z., Sauhats, A. Tirgus modelēšana un imitācija: atjauninātie rezultāti: Valsts pētījumu programma “Enerģētika”, projekts “FutureProof” VPP-EM-INFRA-2018/1-0005. Rīga: Rīgas Tehniskās universitāte, 2021. 35 p.

Publication language
Latvian (lv)