Impacts of wind on the Nordic wholesale market. Therese Gjerde- Vice President Spot Bergen Energi AS

Transcription

1 Impacts of wind on the Nordic wholesale market Therese Gjerde- Vice President Spot Bergen Energi AS 1

2 Agenda Bergen Energi in brief Facts renewables Potential impacts on prices and uncertanties Summary 2

3 Our Business Pan European Services MiFID Licensed Energy Experts Alliance 3

4 Our Services 4

5 Facts renewables 5

6 Background EU electricity markets are experiencing fundamental changes as a result of the goal: Reducing greenhouse gas emissions by 20% 20% from renewable resources 20% reduction by improving energy efficiency Nordics is uniqe as both potential and excisting renewable energy use is very large

7 Current and future installed capacity renewables According to National Renewable action plans 199 GW in 2020 from renewables High increase in on- and off- shore wind A total of 94 GW installed wind in 2011 in the EU Source Pöyry 7

8 Installed and planned wind in the Nordic countries Source Nordic Energy Perspective 8

9 Characteristics wind Winter Storm and Summer Breeze Hours

10 Wind Power against Temperature

11 Potential impacts on the market 11

12 Variable output renewables Wind power is an intermittent production source wind that cannot be stored Highly variable output High but unpredictable wind winter Solar in summer Will not balance out Wind power is an energy resource but not a capacity supplier Source Pöyry 12

13 Variable output Nordics With assumed capacity of MW wind in the Nordics Source: Nordic Energy Perspectives Highly different output for different «wind years» Variation is almost 3 * higher then Swedish nuclear capacity 13

14 High need for back up capacities Periods with high demand and low wind generation increases the risk for capacity shortage Critical interactions between RES and conventional generation Strong support schemes for RES and high CO2 tax/price has led to a phasing out of conventinal plants..thermal generation not profitable long term. High and increasing dependency of nuclear power As a baseload capacity provider But. Political sensitive issue..espescially in Sweden Treath to SoS due to sharpened safety standard. 14

15 Impact on prices By 2030 European market prices will have become highly volatile Long periods of zero or negative prices Driven by short term weather patterns Effect depending on mix Historical weather: = least windy day = Windiest day Source Pöyry Hourly wholesale prices for a single day ( /MWh) 15

16 Impact on prices Prices will become more unpredictable, due to the very nature of weather Prices in 2010 are only marginally affected by weather but in 2030 different weather produce radically different market prices. Source Pöyry 16

17 Impact on Nordic prices..today situation Impact of wind on Swedish area prices Large transmission capacity internally in Sweden Plus transitt via Finland - Fenno-Scan 2 Highly correlated with Europe Impact of wind on Norway Norway has poor transmission capacity internally But NO3 and NO4 is strongly correlated with Sweden High price area! Limited transmission capacity to NO1 Low impact 17

18 Impact on prices Increased wind capcacity will give a shift in the marketcross impact depends on the time of the day. In Peak where most of the capacity will be used (steep part of supply curve) strong impact, High wind will reduce the spot price significantly During the night, when demand is low and power is produced on base load plants, (flat part of supply curve) Impact of wind is low Source: Risø DTU 18

19 Impact on prices Nordics..future scenario Prices likely to rise with increasing export Differences between Nordics and Continent are likely to remain Due to internal grid restrictions, at least for some Nordic regions Less volatilty due to good balancing possibility with hydro Source Nordic Energy Perspective 19

20 Impact on Nordic prices future scenario For other Nordic regions closer to Europe, prices are more equal to the continent Source Nordic Energy Perspective 20

21 More zero and negative prices As seen a lot in Germany Can make capacity investments less attractive Producers nightmare?

22 But..complex picture with a lot of factors to consider 22

23 Market coupling balances out Market coupling may reduce the volatility. Gives an harmonization of prices in the region The effect of market coupling dependent on interconnectors Europe is a small continent and weather impacts are often the same Takes time to build Big inrease in capacities cross border needed 23

24 Antall timer Effects of market coupling % % 14% % % 600 8% % 4% 2% Like priser på NP og EEX % 0% 24

25 Effects of market coupling 25

26 Interconnectors in the pipeline 2011: Fenno-Skan2; SE-FI, 800 MW 2014: Estlink2; FI-EE; 650 MW 2014: Skagerrak 4; NO-DK; 700 MW 2016: NordBalt; SE-LT 700 MW 2016: LitPol; LT-PL; 500 MW 2016: South-West link; NO-SE; 1200 MW 2016 COBRA cable, DK-NL; 700MW : NorNed 2; NO-NL; 700 MW 2016: NorGer; NO-GE; 1400 MW* eller : NordLink; NO-GE; 1400 MW* : NSN; NO-UK; 1600 MW Over MW towards

27 Interconectors.. Increasing interconnectors will give higher prices in the Nordics Producers will increase their profits..consumers will face increased costs Politically controversial. How does the Nordic opinion feel about exporting their renewables to the continent and with that getting increased costs? If export capacities are is not further developed as planned, it could give in lower prices in the Nordic region Other issues: Interconnectors might changes flows and create more end new bottlenecs And potentially more price areas in the Nordics 27

28 Internal grid investmenst The European Network of Transmission System Operators for Electricity (ENTSOE) has pointet out 100 potential bottlenecks in the Europen Grid 80% of these are directly linked to the intergration of renewables 28

29 Investments towards 2020 Billion Euros in planned grid investments towards 2020 Germany 30,1 United Kingdom 19,0 France 8,8 Italy 7,1 Norway 6,5 Spain 4,8 The Rest of Europe 26,2 Total 102,5 Source: 29

30 Demand flexibility More demand flexibility in the market will: Reduce peak price level Reduce average spot price volatility Reduces the need for investments into peak power capacity Large potential in households with Smart Meter developments Could even out the spot and regulating prices Estimate of the potential for demand flexibility in the Nordic area Source: Seppo Kärkkäinen, VTT 30

31 More flexible markets Importance of intraday market will increase Increased need to adjust short term before delivery Better information on wind..more accurate forecasts Intraday adjustments might decrease the need for balancing reserves Benefits for the systems and for pricing! Liquidity issues needs to be addressed Shorter gate closer More flexible products Integrated European intraday markets to balance out 31

32 Effect on Nordic prices is also depending on. Demand developement Weak demand growt is expected (industries iron, steel ) Energy efficency measuments and smart meters Surplus situation will give declining market prices Political targets as drivers for Investments The lower the market price becomes the higher does the subsidies need to become in order to meet targets.. Might slow down RES growht 32

33 Summary Challenging increase in wind production Variable outputs Increased need for back up capacities More bottlenecs More demand flexibility needed More efficient short term markets needed How will the Nordic prices respond to increased capacity from wind? More volatile and unpredictable prices But complex picture with a lot of uncertainties. Interconnectors Interal grid development Demand growth? Market developement EU and National renewable policies 33

34 Thank you for your attention Any questions? Therese Gjerde -Vice President Spot Bergen Energi AS 34