Implications of the interconnection of the UK to the Nordic power market

Behnam Zakeri, Sanna Syri

Research output: Contribution to conferencePaperScientific

Abstract

The EU energy policy seeks to integrate regional European electricity markets through market couplings and expansion of cross-border interconnections. There are several plans to further interconnect Great Britain to other regions through new transmission lines, e.g., to the Nordic power market. The abundant hydro storage reserves in Nordic countries is deemed a solution for balancing electricity from variable renewable energy (VRE) in the UK and projected offshore wind farms in the North Sea. We analyze the impact of new transmission lines between the UK and Norway, and the UK and Denmark, under ongoing network expansion plans.

We propose a market-based multi-region energy systems model, which is based on a mixed method: (i) energy systems modelling of each individual region, combined with (ii) power market model (market and network optimization) of all coupled regions. We apply an integrated hourly analysis of both heating and power sectors, to capture the role of electricity from VRE, and combined heat and power (CHP) plants.

The results demonstrate that the average power prices will decline in the UK after further couplings with the Nordics. However, the lower market prices lead to lower revenues for UK power producers and lower production rate for thermal power plants, which may increase the levelized costs of electricity (LCOE) generation from such plants. Considering the respective gain of the grid owner (from congestion rent), the overall system-level benefits (social welfare) increases in the UK. Nevertheless, the profits from such couplings are not evenly distributed among different Nordic countries and market participants. The results also show lower carbon in the UK power system after the market couplings. Since benefits from future market couplings are not evenly distributed between market participants (different producers, consumers, and grid owners), an efficient mechanism is required to maintain capacity adequacy, under a competitive international market.
Original languageEnglish
Publication statusPublished - Jun 2016
EventEnergy Systems Conference: 21st Century Challenges - QEII Centre, Westminster, London, United Kingdom
Duration: 14 Jun 201615 Jun 2016
http://www.energysystemsconference.com/

Conference

ConferenceEnergy Systems Conference
CountryUnited Kingdom
CityLondon
Period14/06/201615/06/2016
Internet address

Keywords

  • Energy policy
  • Renewable energy integration
  • Interconnector
  • Power market model
  • Energy systems analysis
  • Hydropower value

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    Zakeri, B., & Syri, S. (2016). Implications of the interconnection of the UK to the Nordic power market. Paper presented at Energy Systems Conference, London, United Kingdom.