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Hydropower Operation in a Changing Market Environment – A Swiss Case Study

Author

Listed:
  • Schillinger, Moritz

    () (University of Basel)

  • Weigt, Hannes

    () (University of Basel)

  • Barry, Michael

    () (University of Basel)

  • Schumann, René

Abstract

Hydropower (HP) is expected to play an important role in the European energy transition by providing back-up and storage capacity as well as flexibility for intermittent renewable energies. However, due to low electricity market prices the profitability of HP decreased in recent years. In this paper, we analyze historic revenue potentials and future market prospects for HP taking into account different development paths. Using a short-term HP operation model to capture market opportunities as well as technical and natural constraints of HP plants, we model three representative Swiss HP plants. The results indicate that in the last years, balancing markets could have provided significant additional revenues for HP plants. However, accounting for uncertainties and market characteristics, the potential of balancing markets is reduced but cross-market optimization is still beneficial. Looking into the future, market price prospects for the coming decade are low to modest. Global fuel markets and the European Union Emissions Trading System (ETS) will be the main drivers for decisions for Swiss HP. The revenue potential from balancing markets will be reduced significantly in the future if all Swiss HP operators aim for balancing. While optimized operation across markets helps Swiss HP to increase its revenues, it is limited in scale.

Suggested Citation

  • Schillinger, Moritz & Weigt, Hannes & Barry, Michael & Schumann, René, 2017. "Hydropower Operation in a Changing Market Environment – A Swiss Case Study," Working papers 2017/19, Faculty of Business and Economics - University of Basel.
  • Handle: RePEc:bsl:wpaper:2017/19
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    File URL: https://edoc.unibas.ch/61299/1/20180306100338_5a9e596a8ce53.pdf
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    References listed on IDEAS

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    1. Barry, Michael & Baur, Patrick & Gaudard, Ludovic & Giuliani, Gianluca & Hediger, Werner & Romerio, Franco & Schillinger, Moritz & Schumann, René & Voegeli, Gillaume & Weigt, Hannes, 2015. "The Future of Swiss Hydropower A Review on Drivers and Uncertainties," Working papers 2015/11, Faculty of Business and Economics - University of Basel.
    2. Deb, Rajat, 2000. "Operating Hydroelectric Plants and Pumped Storage Units in a Competitive Environment," The Electricity Journal, Elsevier, vol. 13(3), pages 24-32, April.
    3. Saarinen, Linn & Dahlbäck, Niklas & Lundin, Urban, 2015. "Power system flexibility need induced by wind and solar power intermittency on time scales of 1–14 days," Renewable Energy, Elsevier, vol. 83(C), pages 339-344.
    4. Weitemeyer, Stefan & Kleinhans, David & Vogt, Thomas & Agert, Carsten, 2015. "Integration of Renewable Energy Sources in future power systems: The role of storage," Renewable Energy, Elsevier, vol. 75(C), pages 14-20.
    5. Perica Ilak & Slavko Krajcar & Ivan Rajšl & Marko Delimar, 2014. "Pricing Energy and Ancillary Services in a Day-Ahead Market for a Price-Taker Hydro Generating Company Using a Risk-Constrained Approach," Energies, MDPI, Open Access Journal, vol. 7(4), pages 1-26, April.
    6. Aggidis, George A. & Židonis, Audrius, 2014. "Hydro turbine prototype testing and generation of performance curves: Fully automated approach," Renewable Energy, Elsevier, vol. 71(C), pages 433-441.
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    1. repec:eee:renene:v:126:y:2018:i:c:p:755-764 is not listed on IDEAS

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    Keywords

    hydropower; cross-market optimization; balancing; Switzerland;

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