The impact of an offshore electricity hub at Kriegers Flak on power markets

Sascha T. Schröder, Helge V. Larsen, Peter MeibomSystems Analysis DivisionRisø DTU

April 22nd, 2010EWEC 2010, Warsaw

22/04/2010Sascha T. Schröder2 Risø DTU, Technical University of Denmark

Outline

•Setting: Offshore hub at Kriegers Flak•The model: WILMAR•Results• Socio-economic benefits• Congestion rents• Duration curves of power flows

•Conclusions

22/04/2010Sascha T. Schröder3 Risø DTU, Technical University of Denmark

Setting: Offshore hub at Kriegers Flak

•Denmark, Germany and Sweden planned offshore wind farms in close proximity at Kriegers Flak, Baltic Sea (2x 600MW, 1x 400MW)

• Idea: Use interconnectors also for trading

Figure source: Kriegers Flak feasibility study, 2009

22/04/2010Sascha T. Schröder4 Risø DTU, Technical University of Denmark

Kriegers Flak: Chronology of events

•Common TSO pre-feasibility study, 2009: Denmark, Sweden, Germany

•EU envisaging financial funding with 150 Mio. Euro (economic recovery package)

•mini-case for North Sea offshore grid•Latest developments:• Feasibility study, 02/2010

• Swedish TSO withdrew/postponed participation, 01/2010

• German wind farm size decreasing from 400 to 300 MW

• EU acknowledges that they will also support a Danish-German solution

22/04/2010Sascha T. Schröder5 Risø DTU, Technical University of Denmark

Setting: Offshore hub at Kriegers Flak

•4 topologies originally discussed•Goal: Compare feasibility study results with own

computations

Figure source: Kriegers Flak feasibility study, 2009

22/04/2010Sascha T. Schröder6 Risø DTU, Technical University of Denmark

The model: WILMAR• developed under the projects Wind Power Integration in Liberalised

Electricity Markets (WILMAR) and SUPWIND• hourly time resolution, 1 year, covering up to 31 European TSO regions

• here: geographical area in analogy to TSOs’ pre-feasibility study• chosen year: 2015

• Stochastic element treated with the Scenario Tree Tool• wind power generation modeled as perfect foresight, deterministic or

stochastic forecast error• here: deterministic forecast error

Figure source: Kriegers Flak feasibility study, 2009

22/04/2010Sascha T. Schröder7 Risø DTU, Technical University of Denmark

Results I• Fuel price assumptions: lower than World Energy Outlook 2008• Socioeconomic benefits of the 4 cases after correction for different

hydropower usage:• benefits (Mio. €2005/a) 22 34.7 43

• Congestion rents, if Kriegers Flak is a single price zone (Mio. €2005/a): 40.4 47.7 51.1

• Congestion rents, if national wind power imports from Kriegers Flak are deducted (Mio. €2005/a):

17.5 19.4 31.7

Figure source: Kriegers Flak feasibility study, 2009

22/04/2010Sascha T. Schröder8 Risø DTU, Technical University of Denmark

Results II

•CO2 emission reductions: about 0.04% for cases C and D• Impact on power prices: minor decrease in Germany,

minor increase in Denmark, rather remarkable increase in Sweden

•but: average hydropower year. In dry years, Sweden would benefit from an additional interconnector.

22/04/2010Sascha T. Schröder9 Risø DTU, Technical University of Denmark

22/04/2010Sascha T. Schröder10 Risø DTU, Technical University of Denmark

22/04/2010Sascha T. Schröder11 Risø DTU, Technical University of Denmark

22/04/2010Sascha T. Schröder12 Risø DTU, Technical University of Denmark

Discussion and conclusion

• Focus at a single offshore node in the Baltic Sea• Flow patterns on interconnectors in line with results from the feasibility

study• Economic benefits from interconnected solution in 2015: about 1/10 of

investment costs (according to feasibility study)• Funding by the EU• Still a number of regulatory issues to be solved

• How to integrate day-ahead wind forecasts and power markets• Offshore balancing responsibility• Support schemes

• Main benefits from Swedish-German interconnection. The impact of the current downscaling is to be assessed critically. Interconnectors separate or modular approach?

• Different Swedish price zones from Nov. 2011• Gain experience for a possible North Sea offshore grid

22/04/2010Sascha T. Schröder13 Risø DTU, Technical University of Denmark

Thank you for your attention!

Sascha Thorsten Schrödersasc@risoe.dtu.dk

+45 4677 5113

Risø National Laboratory for Sustainable EnergyTechnical University of Denmark – DTU

Systems Analysis DivisionBuilding 110, P.O. Box 49

DK-4000 Roskilde, DenmarkTel +45 4677 5100Fax +45 4677 5199

www.risoe.dtu.dk