Economic perspectives of market integration and demand flexibility within a smart grid dominated power sector

Abstract

The developments related to integration of renewable energy sources, smart grid and market liberalization make the transition of the power system to a new state inevitable. This PhD work aims to analyze some of the market impacts associated with the important changes that will take place in the Northern European power system. First, the European countries set ambitious renewable energy targets and the share of renewable energy in the generation mix is expected to increase. Second, technological innovation has made possible the development of a smart grid that will be able to deal with the variety of new trends in the power sector. Third, the regulatory authorities in the Nordic region are cooperating on further market integration in the face of a common balance and reconciliation settlement model and a common electricity end-user market. In the course of four research articles this thesis answers questions related to the above described changes in the power sector. In particular, the PhD work describes: (i) how integration in the balance settlement procedures will impact the balancing prices; (ii) what effect a common Nordic end-user market will have on the electricity retailers’ market strategies, their price markup and profit; (iii) what will be the market impacts of increased demand flexibility.

Kraftsystemet står overfor store endringer som følge av økt utbygging av fornybar energi, introduksjon av smart grid og markedsliberalisering. Dette doktorgradsarbeidet har som mål å analysere noen av de markedsmessige konsekvensene knyttet til disse viktige endringer. Forskningsarbeidet tar utgangspunkt i et smart grid dominert kraftsystem og ved hjelp av fire vitenskapelige artikler forsøker det å svare på følgende spørsmål: (i) hvordan vil bruken av en modell for felles balanseavregning påvirke balanseprisene i Norden; (ii) hvilke effekter kunne et felles nordisk sluttbrukermarked for kraft ha over kraftleverandørenes markedsstrategier, deres pris påslag og profitt; (iii) hva som kan være markedskonsekvensene av økt forbrukerfleksibilitet.