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Hydro Power Operation and Economic Performance in a Changing Market Environment

With more than 50% of total electricity generation hydropower plays an important role in the energy production of Switzerland, and it will do so in the future. However, due to the market developments in recent years HP companies face several challenges: a) the increased share of renewables leads to price reductions and changed production profiles of conventional plants (merit order effect and back-up discussion), b) the volatile nature of renewables increases the importance of reserve/balancing and system stability aspects, and c) the European market liberalization has led to increased competition across national borders and new market and trading alternatives for energy companies. To successfully implement the Energy Strategy 2050 sufficient investments are required, that needs to be financed by the operation. Thus, production needs to become more flexible to cope with the increased volatility of the market. The aim of this project is to provide modeling tools and insights how HP operation can account for those challenges by extending the existing approaches to account for different trading alternatives and market segments like future markets, the energy spot-market, or the reserve capacity market while at the same time include the technical and socio-economic constraints on the plant operation. This will be done for single and cascading hydropower plants. Also we will provide a methodology and tooling for the economic assessment of upcoming HP techniques that can increase efficiency or flexibility of HP production. This information will help the Swiss hydropower industry, to increase their profitability and therefore support the goals of the Energy Strategy 2050, and increase their competitive situation in the European energy market.

This project is a sub-project of the joint project "The Future of Swiss Hydropower".

Key Information

Researchers from SCCER CREST: Prof. Dr. René Schumann, Prof. Dr. Hannes Weigt, Moritz Schillinger, Michael Barry
Work Package / Task: 3
Research Partners: University of Basel
Keywords: Energy Markets, Hydropower, Renewables, Market Modeling, Energy Trading, Energy Efficiency, Energy Economics, Switzerland, Energy Strategy
Start date: 01.10.2014
End date: 30.09.2018
Status: completed

Competence Center for Research in Energy, Society and Transition
In case of questions, please contact the Management Office
In case of questions, please contact the Management Office.
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