Possibilities of hydropower to balance wind power on the Nordic electricity market

Abstract

Nordic governments are committed to the international greenhouse gas (GHG) emis-sion reduction agreements. Due to the advanced externality mitigation policies, the share of wind power in the Nordic market area has grown 10-fold during the 2010s and a further doubling of the total wind power generation capacity is planned to be imple-mented by 2030. Furthermore, the Nordic electricity system has an exceptionally high share of hydropower, 51% of the total gross generation in 2019. The hydropower pro-duction and storage in Norway and Sweden is expected to provide valuable regulating power in the Nordic electricity market as the share of variable renewable energy sources (RES, e.g. wind power) increases. This study focuses on analyzing some of the alterna-tive 2030 development scenarios for the Nordic electricity system and market. The changing scenario variables include forecasted electricity prices, generation mix and pumped hydro storage capacity. The energy market scenarios are modeled with Ener-Allt, a MATLAB-based energy system model, which is used to model on hourly basis the energy system operation, consequent bidding area prices and exchange flows by consid-ering the transmission line limitations between bidding areas. Therefore, this thesis provides bidding area resolution insights about the economic and technical impacts of the most ambitious RES expansion plans available for public in the Nordic electricity market. The goal of the thesis is to provide realistic estimates of the share of wind power that can be integrated to the Nordic energy system without the need for system level investments. The impacts of bottlenecks in transmission are analyzed and recommend-able priorities for further transmission investments are indicated.