Ensuring adequacy of internal transmission capacity in Finland : Means besides network investments
Salvi, Valtteri (2022)
2022
Sähkötekniikan DI-ohjelma - Master's Programme in Electrical Engineering
Informaatioteknologian ja viestinnän tiedekunta - Faculty of Information Technology and Communication Sciences
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Hyväksymispäivämäärä
2022-09-21
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:tuni-202208306807
https://urn.fi/URN:NBN:fi:tuni-202208306807
Tiivistelmä
The electrification of society and the consequent growth in electricity production and consumption challenge the electricity system. In Finland, the new electricity production will probably mainly be wind power, which locates especially in the northern and western parts of the country, and at the same time combined heat and power production is decreasing in cities. Instead, consumption will continue to be concentrated in Southern Finland. The geographical imbalance between consumption and production combined with the growth of electricity consumption increases the need for north-south transmission and requires the multiplication of transmission capacity.
Multiplying the electricity transmission capacity requires network investments and the rapid growth of electricity consumption challenges the speed of network construction. If network construction and other technical means are not sufficient to ensure the adequacy of transmission capacity, means to incentivize production and consumption to be located more optimally for the grid or means to manage congestion are needed.
In this thesis, location-based usage and connection charges, locational electricity markets, and redispatch are examined as means to ensure the adequacy of the transmission network. The means are different in type and effect mechanism. Location-based charges affect proactively the location of investments, redispatch is a way to manage congestion when transmission capacity is exceeded, and locational markets impact both congestion management and the location of investments.
In terms of location-based charges, European references are examined and the impact of location in these tariff structures on consumption and production assets is evaluated with examples. Changes in market structure are evaluated using market modelling and the effect of a possible division into bidding zones on the electricity prices is examined with different weather years. Market modelling also determines the transmission needs which together with transmission capacity define the need for redispatch and the resources required for it.
In the examinations, differences up to about 10 €/MWh can be caused between different locations around the network in studied tariff structures. The bidding zone simulations produce with all weather years annual price differences between Northern and Southern Finland only less than 2,50 €/MWh, 1,00 €/MWh or 0,20 €/MWh depending on the transmission capacity used in the simulations. If congestion would be managed with redispatch, need for regulation resources would be thousands of megawatts in the transmission situations of the most challenging weather years. For example, with the transmission capacity producing the smallest price difference in bidding zone simulations, the resource need would be more than 5 000 MW. Market modelling related to transmission needs and bidding zones is done in 2035 with a scenario predicting rapid growth in electricity consumption.
Multiplying the electricity transmission capacity requires network investments and the rapid growth of electricity consumption challenges the speed of network construction. If network construction and other technical means are not sufficient to ensure the adequacy of transmission capacity, means to incentivize production and consumption to be located more optimally for the grid or means to manage congestion are needed.
In this thesis, location-based usage and connection charges, locational electricity markets, and redispatch are examined as means to ensure the adequacy of the transmission network. The means are different in type and effect mechanism. Location-based charges affect proactively the location of investments, redispatch is a way to manage congestion when transmission capacity is exceeded, and locational markets impact both congestion management and the location of investments.
In terms of location-based charges, European references are examined and the impact of location in these tariff structures on consumption and production assets is evaluated with examples. Changes in market structure are evaluated using market modelling and the effect of a possible division into bidding zones on the electricity prices is examined with different weather years. Market modelling also determines the transmission needs which together with transmission capacity define the need for redispatch and the resources required for it.
In the examinations, differences up to about 10 €/MWh can be caused between different locations around the network in studied tariff structures. The bidding zone simulations produce with all weather years annual price differences between Northern and Southern Finland only less than 2,50 €/MWh, 1,00 €/MWh or 0,20 €/MWh depending on the transmission capacity used in the simulations. If congestion would be managed with redispatch, need for regulation resources would be thousands of megawatts in the transmission situations of the most challenging weather years. For example, with the transmission capacity producing the smallest price difference in bidding zone simulations, the resource need would be more than 5 000 MW. Market modelling related to transmission needs and bidding zones is done in 2035 with a scenario predicting rapid growth in electricity consumption.