Climatic and electricity demand effects on Norwegian hydropower revenue in a daily and annual perspective

The present study seeks to examine the production and revenue of Norwegian micro, small and large hydropower plants (HPP) under variable climatic conditions and a stable energy market. Climatic conditions and demand for electricity are postulated as major factors that determine the operations of HPPs both on a daily and an annual basis. However, the importance of these effects is rarely evaluated. Here, we used hourly production during 2010–2018 from 1371 Norwegian micro, small and large HPPs to quantify the climatic and electricity demand effects on revenues in the three HPP categories that typically differ in their flexibility and ability to respond to high hourly prices both on a daily and an annual basis. For all three categories, the storage of water in a reservoir significantly increased daily and annual revenues. The effects of the number of starts differed among HPP categories, showing a negative relationship with revenue in micro HPPs and positive in large HPPs both at daily and annual levels, whereas for small HPPs the relationship switched from positive to negative on a daily and annual basis, respectively. For large HPPs, daily and annual revenues increased in dry years. For all three HPP categories the annual revenue was considerably higher during the positive phase of the North Atlantic Oscillation (NAO) and when the Northern Hemisphere Temperature (NHT) was warmer. The daily revenue for small HPPs decreased during the positive phase of the NAO. Our study demonstrates that hydropower production is vital in a variable energy market of renewable energies, and that climate and electricity demand have detectable effects on daily and annual revenues.