Integrating Balancing Markets in Hydropower Scheduling Methods Integrasjon av balansemarkeder ved produksjonsplanlegging for vannkraft

The future European electricity system will be more integrated and will include a larger share of renewable intermittent generation than what is the case today. This development will e.g. be driven by a stronger transmission grid, envir¬on¬mental targets set by the European Union and decisions on downscaling of nuclear generation capacity. Tighter market couplings and in¬creased contributions from intermittent generation will call for efficient balancing services, and possibly the development of new products to handle system balancing. The flexibility of hydropower allows for efficient balancing of intermittent production. By fully utilizing this flexibility, hydropower producers can optimize the use and allocation of available capacity in the different electricity markets. Thus, the value of flexible hydropower generation can be enhanced by participating in multiple markets. The impor-tance of the diff¬er¬ent types of market products may change significantly from what Scandinavian hydro¬power producers are familiar with. Today, the producers primarily benefit from selling power in the day-ahead (spot) market. However, the inherit flexibility of hydropower enables active con¬tri¬bution in balancing markets as well. In central Europe, the revenue of hydropower obtained from balancing markets is significantly higher than in the Nordic market. This project has concerned the integration of balancing markets in hydropower scheduling methods, with emphasis on long- and medium-term hydro scheduling. A core research challenge has been to develop methodology and computer tools assess profitability and to compute the expected marginal value of water (water values) for hydropower systems selling energy and balancing services to appropriate markets. Our research has involved many balancing market products, e.g. slow and fast reserve capacity, balancing energy and inertia. Our emphasis has been on the integration of reserve capacity markets (generic treatment, slow and fast) in the scheduling. Selling reserve capacity is an alternative to generating electricity, and thus the different reserve capacity products are most likely to impact the water values. The impact of including balancing markets in the hydropower scheduling has been assessed by reviewing existing approaches, illustrating concepts by use of simple conceptual models, and extending current scheduling methodology. We have extended the existing state-of-the-art methodologies stochastic dynamic programming (SDP) and stochastic dual dynamic programming (SDDP) to allow sales of reserve capacity, and implemented the new methods in research prototype computer models. The new methods and computer models are documented in scientific articles and tested in case studies on realistic data. Accurate modelling of reserves often requires better representation of technical details than what is possible in linear programming models. As an example, the representation of nonconvex PQ-curves and exact generator start-stop decisions are important when considering down-regulation reserves. For the purpose of treating such nonconvex relationships in the hydropower scheduling, we have investigated a new methodology known as stochastic dual dynamic integer programming (SDDiP), which has proved promising results. In sum, the project has established a toolbox of methodologies and research prototype computer models for hydropower scheduling incorporating treatment of balancing markets. We believe that the knowledge built in this project supplemented by the established methodology toolbox will be important contributions when adapting the operational hydropower scheduling to the future power markets.

I prosjektet har flere typer eksisterende og mye brukt metodikk for optimal planlegging av vannkraftsystemer har blitt utvidet til å omfatte forskjellige varianter av produktet reservekapasitet. Nye og erfarne forskerne i prosjektet har styrket sin kompetanse på metodikk for vannkraftplanlegging. Gjennom omfattende internasjonal publisering i anerkjente tidsskrift har prosjektet bidratt til å opprettholde SINTEF Energi og NTNU sin rolle som internasjonalt ledende på driftsplanlegging av vannkraftbaserte systemer. Prosjektdeltakerne har sammen diskutert betydningen av flere markeder i driftsplanleggingen. Med dagens priser og volum er betydningen liten. Det er derfor lite sannsynlig at metodikken umiddelbart tas i bruk blant Nordiske produsenter. Prosjektdeltakerne har øket sin kompetanse på hvordan man best tallfester betydningen av flere markeder og studerer virkningen på driftsresultatene.

The future European electricity system will be more integrated and will include a larger share of renewable intermittent generation than what is the case today. This development is e.g. driven by environmental targets set by the European Union and decisio ns on downscaling of nuclear generation capacity. Tighter market couplings and increased contributions from intermittent generation will call for efficient balancing services, and possibly the development of new products to handle system balancing. The flexibility of hydropower allows for efficient balancing of intermittent production. By fully utilizing this flexibility, hydropower producers can optimize the use and allocation of available capacity in the different electricity markets. Thus, the value of flexible hydropower generation can be enhanced by participating in multiple markets. An increasing share of the income from hydropower production is likely to come from other markets than the day-ahead market. This project aims at identifying how the increasing importance of balancing markets influences the hydropower scheduling process and the tools that are used in the planning process. This goal will be achieved by defining how the hydropower strategy should be computed and interpreted taking into account balancing markets. The focus of the project is the effect on seasonal and long-term hydropower scheduling, but in order to do this the whole planning process must be considered. We define the following major research tasks: 1) Review existing m ethods and tools. There is a need to develop general knowledge about integrated markets and how to model their co-existence. 2) Investigate the principles of integrated markets. Based on the findings in 1), simple models will be developed to illustrate an d investigate basic principles. 3) Establish stochastic parametric models for balancing markets. 4) Integrate balancing market models in seasonal or long-term hydropower scheduling models.