Outlook for Generation and Trade in the Nordic and German Power System Dissemination Event 11-06-2015 NH Hotel Berlin Friedrichstraße Anders Kofoed-Wiuff and János Hethey
Agenda Introduction Methodology Results and findings Power generation Climate effects Power prices Trade Value of transmission Perspectives 2
Why increase transmission grid capacity? Motivation for closer grid integration Potential for green generation surplus in the Nordics Nordic hydro power can act as a very efficient battery Geographic smoothing effects for variable generation Resource sharing across regions for back-up and ancillary services 3
Transmission is not for free Investment in generation vs. transmission Other options Flexible demand New types of demand Curtailment 1,400 MW 700 MW M M /MW Skagerrak IV 440 0.6 NordLink 2,500 1.8 Cobra 620 0.9 Onshore wind 1.3 Offshore wind 3.6 Solar power 1.3 700 MW 4
Scenario design Variation RE deployment Grid expansion Nordics and Germany (TYNDP 2020 and 2030) Investment in new generation capacity (Model optimised) Decommissioning of existing capacity (Model optimised) Common assumptions RE deployment + other investments in neighbouring countries Grid development in neighbouring countries: TYNDP until 2025 Fuel and CO2-prices Electricity and heat demand More RE Moderate RES-E High RES-E Higher transmission capacity Moderate integration of grids ModRE_ModTrans HighRE_ModTrans Welfare analysis High integration of grids ModRE_HighTrans HighRE_HighTrans 5
Modelling tool Balmorel Power and district heating Linear model, programmed in GAMS Least cost optimisation based on framework conditions Investments Generation capacity Transmission capacity Storage Dispatch of power plants North America -Wind integration in East Canada and North-East USA UK/Ireland -Large scale wind integration Denmark -District heating analysis -Analysis of geothermal heat in DK -Heat Plan for Greater Copenhagen -Danish Commission for climate change: 100% Renewable energy + many other projects Baltic Sea region -Transmission interconnector study Estonia -Energy scenarios 2030 and 2050 for Estonia -Wind power in Estonia -System adequacy in Lithuania -Post-Kyoto Energy Scenarios for the Baltic Sea Region China -Wind integration in Heilongjiang -2050 Scenarios for China Western Africa -West African Power Pool South Africa -Costs and benefits of renewable energy -Transmission lines and new generation (hydro and coal) Eastern Africa East African Power Pool: Regional Master Plan update Mauritius Energy Policy for Mauritius See: www.eaea.dk/themes/111_theme_modelling_of_energy_systems.html for project description and reports
RES-E deployment Nordics Wind generation expected to double by 2030. Some hydro development in Norway Biomass increase in Denmark and Sweden Solar power could have larger share depending on price development Annual electricity generation (TWh) 450 400 350 300 250 200 150 100 50 0 2013 The Nordics 2030 - ModRE +105% +28% +44% 2030 - HighRE Offshore wind 5 20 29 Onshore wind 21 47 85 Solar 0 1 1 Biomass 28 52 47 Hydro 209 216 216 Total RE 263 336 378 +345% 7
RES-E deployment Germany Significant increase towards 2030 approaching total level of the Nordics Total RES-E doubles Variable RES-E increases up to +260% No new investments in coal capacity allowed 450 400 350 300 250 200 150 100 50 0 2013 Germany 2030 - ModRE +173% +105% 2030 - HighRE Offshore wind 2 59 95 Onshore wind 59 141 178 Solar 32 52 63 Biomass 46 53 53 Hydro 19 20 20 Total RE 158 325 409 +263% +158% 8
Power balance (RES-E and Nuclear only) Integration challenge Wind/solar: Variable/Non dispatchable Relatively low capacity factor low short run marginal cost: Wind, Solar, Biomass*, Nuclear Significant surplus in the Nordic countries Potential room for import in Germany Transmission system stressed increased importance in the HighRE-scenarios * Model perspective due to scenario setup with predefined biomass production amounts 9 Stylised market clearing Source: DTU Management engineering ModRE: + xx TWh HighRE: + xx TWh M: + 15 H: + 33 M: + 8 H: + 8 M: - 227 H: - 143 M: + 12 H: + 29 M: - 10 H: - 13
Grid development 2013-2030 Moderate Trans High Trans Additional +47 GW capacity Further No internal congestions No internal +7.3 in Germany GW capacity congestions in Germany (in core countries) 10
Generation mix Increasing share of RES-E, in particular variable RES-E Reduced generation from fossile fuels Region as a whole is a net exporter HighRE-scenarios Additional potential +130 TWh wind and solar Total >75% RES-E Power generation (TWh) 1.000 800 600 400 200 0 Moderate RE Nordics, Germany 12 % wind+solar 44 % RES-E 2013 2030 Nominal gross demand: 964 TWh 33 % wind+ solar 68 % RES-E Nuclear Coal Lignite Other MSW Natural gas Biogas Biomass 11
Generation mix Moderate vs. High Transmission Moderate RE Better utilization of wind and biomass Power generation change (TWh) 2,0 1,0 0,0-1,0-2,0-3,0 Nordics Germany Total High RE Better utilization of wind and biomass Reduced curtailment (2 TWh) Power generation change (TWh) 2,0 1,0 0,0-1,0-2,0-3,0 Nordics Germany Total 12
Climate effects CO 2 savings Nordics and Germany: Additional RE: CO 2 -savings 25% Additional transmission: CO 2 -savings 1-2% No effect on CO 2 -prices taken into account European Emissions Trading System: Short term effect of CO 2 - savings -> price decrease CO 2 -emission (Mt/year) 400 350 300 250 200 150 100 50 0 CO 2 -emissions Nordics and Germany 2013 2020 2030 ModRE_ModTrans_hourly HighRE_ModTrans_hourly ModRE_HighTrans_hourly HighRE_HighTrans_hourly Moderate RE High RE % %/year Nordics + Germany -0.7% -2.1% Surrounding countries -0.1% -0.5% Nordics, Germany and surrounding countries -0.3% -1.1% 13
Annual electricity prices Moderate RE High RE Prices ModTrans xx /MWh HighTrans xx /MWh 49 51 49 51 48 50 25 30 28 30 31 31 54 56 42 46 58 57 51 51 14
Electricity price variation Main flow direction: South Number of hours with price difference ModRE Norway < Germany 6200 Equal 550 Germany < Norway 2000 Electricity price ( /MWh) 80 60 40 20 0-20 -40-60 -80 Duration curve for price spread DE - NO_SW Hours ModRE_ModTrans_hourly ModRE_HighTrans_hourly 15
Electricity price variation Main flow direction: South Number of hours with price difference ModRE HighRE Norway < Germany 6200 7000 Equal 550 550 Germany < Norway 2000 1200 Electricity price ( /MWh) 80 60 40 20 0-20 -40-60 -80 Duration curve for price spread DE - NO_SW Hours ModRE_ModTrans_hourly HighRE_ModTrans_hourly ModRE_HighTrans_hourly HighRE_HighTrans_hourly 16
Flows between Nordics and Germany Gross flows between Nordics and Germany Flow (TWh) 45 40 35 30 25 20 15 10 5 0 To Germany ModRE_ModTrans ModRE_HighTrans HighRE_ModTrans Nordics HighRE_HighTrans ModRE_ModTrans To Nordics ModRE_HighTrans HighRE_ModTrans Germany HighRE_HighTrans Net flows (from all neigbouring countries) Net Imports (TWh) 50 40 30 20 10 0-10 -20-30 -40 GERMANY DENMARK FINLAND NORWAY SWEDEN 17
System costs ModRE_ModTrans ModRE_HighTrans HighRE_ModTrans HighRE_HighTrans System cost excluding transmission investment Redistribution of generation CO 2 -savings High Transmission: 208 348 Million /year Sensitivities: Less nuclear (SE) -> Less benefit Flexible demand -> Less benefit 6-13 Million /year Million /year 300 250 200 150 100 50 0-50 -100 System cost Germany Nordics Surrounding countries Total Germany Nordics Surrounding countries Moderate RE High RE Capital and fixed O&M Fuel + var. O&M CO2-cost Other Total Total 18
Marginal value of transmission Innnn = ModRE ModTrans aaa. mmmmmmmm vvvvv iiiiiiiiii cccc 0.2 HighRE ModTrans 0.9 0.2 1.3 0.8 0.5 3.3 6.0 0.1 0.2 0.2 0.2 1.1 2.9 0.6 0.5 0.3 2.6 7.4 1.5 19
Key observations Potential for increased electricity trade between Nordics and Germany compared to today Increased transmission capacity -> Better utilization of RES-E Potential for CO 2 -savings Convergence of electricity prices -> distribution of benefits differs by country Moderate RES-E deployment Different composition of transmission package would be more beneficial from a system perspective Further integration on some lines Careful optimization needed High RES-E deployment Potentially large price spreads Chosen transmission package can be beneficial from a system perspective Further integration potential 20
Drivers for transmission Motivation for closer grid integration Potential for green generation surplus in the Nordics Nordic hydro power can act as a very efficient battery Geographic smoothing effects for variable generation Resource sharing across regions for back-up and ancillary services Roughly 35 70-80% of flow between 30 Nordics and Germany due to net 25 export Flow (TWh) 45 40 20 Roughly 15 20-30% of flow between Nordics 10 and Germany due to battery 5 0 To Germany Small effect on total capacity in Moderat RE scenarios ModRE_ModTrans ModRE_HighTrans HighRE_ModTrans HighRE_HighTrans ModRE_ModTrans ModRE_HighTrans HighRE_ModTrans Approx. 700 MW capacity savings in High RE scenarios Nordics To Nordics Germany HighRE_HighTrans 21
Perspectives Optimization of grid planning Other important factors to consider Hydro power variability System service requirements Flexibility of power plants Reserve sharing 22
Discussion System operation System requirements can increase value of transmission Number of hours in the German system with a dispatchable generation below x GW Below 5GW Below 20GW Moderate RES-E 600 3,500 High RES-E 1,150 4,700 Curtailment < 1 % 10-18% 23