Renewable energy in Northern European power markets : effects, challenges and integration options
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The Northern European power system is currently experiencing an extensive growth in production from renewable energy sources (RE), which is expected to continue in the coming decades. Due to the variable, uncertain and location-specific supply of variable renewable energy technologies (VRE) like wind, solar and run-of-river hydropower, increasing deployment levels cause increasing integration costs and power system challenges. The variable nature of VRE technologies causes challenges related to excess supply and congestion. Furthermore, the merit order effect from VRE variability causes a downward effect on electricity prices, with associated reduced profitability, or market value, of VRE technologies. A flexible power system that could adjust to changes in supply is advantageous for costeffective integration of high VRE market shares and for mitigating the drop in the VRE market value. The main objective of this thesis is to investigate how the increasing RE market shares in Northern Europe towards 2030 will affect the power market and the value of VRE, and how increased power system flexibility can improve integration, hence increasing the market value of VRE. Based on some methodological limitations and knowledge gaps identified in the existing literature, three sub-objectives (SO) are investigated: SO1) Power market effects of the Norwegian-Swedish tradable green certificates and the German solar feed-in tariffs, SO2) Benefits of increased interconnection between thermal and hydropower dominated regions and SO3) Effects of increased demand-side flexibility (DSF) for improved VRE integration.