CERE's annual winter workshop took place from March 30th to April 1st in the beautiful nature of Ammarnäs. As the tradition dictates, the main focus of the meeting was to give opportunities for PhD and Post-Doc members of CERE to present their current works. However, senior members of CERE and invited keynote speakers also presented their research to enrich the content of the meeting.
This year's keynote speakers, professor Rauli Svento and research professor Maria Kopsakangas-Savolainen from Oulu Business School, drove all the way to the up north Ammarnäs. Despite them getting lost along the way due to a serious discussion of physics, they were amazed by the spectacular nature and enjoyed the workshop immensely. Both gave very interesting presentations about their current research on energy. Below is a summary of Maria's talk, which is about an ongoing analysis about economic value of intermittent power for Nordic power markets.
Recent changes in electricity markets relate to market penetration of intermittent energy supply from renewable resources, and to technological developments in smart grids and ICT (Information Communication Technology) based digital services. Currently, due to reduction costs in solar and wind generators, as well as to the growth of environmental awareness, the capability to produce electricity from these sources is also becoming available to individual customers.
A key problem related to increased penetration of energy from renewable sources is that they are producing energy variably (intermittently) – wind generators can only produce when wind is blowing and solar generators when the sun is shining. Minimizing integration costs (or maximizing economic value) of variable production can have significant effects to the society in transition to the new energy system. If traditional levelized cost approach is used it gives inappropriate and misleading results. Because it is not possible to efficiently enough reduce integration costs through management of intermittent production, efficient management of demand and optimal utilization of forecasts related to both load and weather conditions are of prime importance when minimizing integration costs. Efficient management of demand to correspond to variable production requires totally novel 1) market mechanisms and market participants, 2) efficient transmission of real time information related e.g. to load, production and weather forecasts (wireless ICT) and 3) digital services.
Taken into these concerns, we analyze the economic value of intermittent power by utilizing a long-run oriented Real-Time Price based model in the Nordic power markets. Using this type of model it is possible to simultaneously take into account the increasing role of demand response and the specific characteristics of intermittent technology. We study the impacts of a change in production profile and increase in the share of intermittent generation to the market prices, equilibrium of other capacities, production costs, profits and CO2 emissions. Our approach which uses hourly output profiles and associated market value of electricity, gives plausible economic values for electricity.