Analyzing electricity market efficiency and impacts of renewable electricity

Anahita Farsaei

Analyzing electricity market efficiency and impacts of renewable electricity

Julkaisun otsikon käännös: Sähkömarkkinoiden tehokkuus ja uusiutuvan sähköntuotannon vaikutukset

Anahita Farsaei

Konetekniikan laitos

Tutkimustuotos: Doctoral Thesis › Collection of Articles

Abstrakti

EU:n tavoitteena on olla ilmastoneutraali vuoteen 2050 mennessä. Kasvihuonekaasupäästöjen nollataso edellyttää toimia kaikilla talouden aloilla, mukaan lukien sähkömarkkinat. Sähkömarkkinat ovat siirtymässä nopeasti uusiutuvan energian käyttöön erityisesti Pohjoismaissa. Vaikka uusiutuvan energian lisääntyvä määrä tasoittaa tietä ilmastonmuutoksen hillitsemiselle, sen vaikutusta markkinoiden tehokkuuteen on tutkittava. Lisäksi yhteen liitetyillä monikansallisilla sähkömarkkinoilla yhden maan paikalliset energiapolitiikan toimet voivat vaikuttaa muihin maihin. Tässä opinnäytetyössä tarkastellaan näitä mahdollisia vaikutuksia. Tässä väitöskirjassa analysoidaan markkinavoimapotentiaalia Iranin sähkömarkkinoilla sekä Suomessa ja Baltian maissa. Uutta Lerner-indeksiä ehdotetaan tarjoushinta-huutokauppaan. Lerner-indeksiä ja HHI-indeksiä käytetään Suomen ja Baltian tilanteiden analysointiin. Lisäksi tässä työssä tutkitaan Suomen ja Ruotsin kansallisten energiasektorin politiikkatoimien vaikutuksia naapurimaihin. Suomi on saattanut voimaan lain kivihiilen energiakäytöstä luopumisesta vuoteen 2029 mennessä. Ruotsissa käydään parhaillaan keskustelua ydinvoimasta. Tässä työssä ehdotetaan eri skenaarioita analysoimaan näiden politiikkatoimien vaikutusta sähkön keskihintaan, hiilidioksidipäästöihin, sähköjärjestelmäkustannuksiin ja sähkökauppaan Suomessa, Ruotsissa ja Baltian maissa. Tätä tarkoitusta varten Enerallt- ja REX-malleilla on mallinnettu lyhyen ja pitkän aikavälin tulevaisuutta alhaisilla CO2-päästöillä. Lyhyellä aikavälillä kivihiili ja turve korvataan Suomessa biomassalla, kun taas vuodelle 2050 tuulivoimaa käytetään yhä enemmän. Myös maiden välisen voimansiirron laajentamista tarkastellaan vuoden 2050 skenaarioissa. Tulokset osoittavat, että Iranissa markkinavoimapotentiaali kasvaa kulutuksen päivittäisten huipputuntien ulkopuolella. Suomessa HHI- ja Lerner-indeksien arvot osoittavat, että tuulivoiman lisääminen sähkömarkkinoilla johtaa useimmiten pienempään markkinavoimapotentiaaliin. Baltian maiden markkinat ovat kuitenkin erittäin keskittyneet huolimatta tuulivoiman merkittävästä saapumisesta sähkömarkkinoille. Paikallisten politiikkatoimien vaikutusten analysointi yhteenliitetyillä markkinoilla naapurimaissa osoittaa, että kansallisen tason politiikalla on vaikutusta laajemmille alueille. Lyhyellä aikavälillä kivihiilen käytön lopettaminen Suomessa voi johtaa sähkön tuonnin lisääntymiseen pohjoismaiselta markkina-alueelta ja jopa sen ulkopuolelta, pääosin hiilidioksidi-intensiivisiltä alueilta. Tässä tilanteessa tutkituista maista vain Suomen CO2-päästöt vähenevät, kun taas muissa alueen maissa päästöt kasvavat hieman. Toisaalta pitkän aikavälin siirtyminen erittäin alhaisiin hiilidioksidipäästöihin sähköntuotannosta voi hyödyttää Baltian maita. Kansainvälisen siirtoverkon vahvistaminen vuoteen 2050 mennessä voi tarjota Baltian maille mahdollisuuden sähkön parempaan omavaraisuuteen ja sähkön viennin lisäämiseen. Tämä vaatii kuitenkin merkittäviä uusia investointeja tuulivoimakapasiteettiin.

Julkaisun otsikon käännös	Sähkömarkkinoiden tehokkuus ja uusiutuvan sähköntuotannon vaikutukset
Alkuperäiskieli	Englanti
Pätevyys	Tohtorintutkinto
Myöntävä instituutio	Aalto-yliopisto
Valvoja/neuvonantaja	Syri, Sanna, Vastuuprofessori Syri, Sanna, Ohjaaja
Kustantaja	Aalto University
Painoksen ISBN	978-952-64-1026-5
Sähköinen ISBN	978-952-64-1027-2
Tila	Julkaistu - 2022
OKM-julkaisutyyppi	G5 Tohtorinväitöskirja (artikkeli)

Tutkimusalat

sähkömarkkinoiden mallinnus
markkinavoima
Lerner-indeksi
sähkökauppa
energiapolitiikka
tuulivoima

YK:n kestävän kehityksen tavoitteet

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http://urn.fi/URN:ISBN:978-952-64-1027-2

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@phdthesis{f007016b6fb948fdbef8226b8477e8f9,

title = "Analyzing electricity market efficiency and impacts of renewable electricity",

abstract = "The EU aims to be climate-neutral by 2050. Achieving net-zero greenhouse gas emissions needsaction in all economic sectors including electricity markets. Electricity market is experiencing a rapid transition to renewable energy especially in the Nordic countries. Although the growing amount of renewables paves the path for climate change mitigation, their effect on market efﬁciency needs to be studied. Furthermore, in an interconnected multi-national electricity market, local energy policies in one country can affect the other countries. This dissertation examines these possible effects. This dissertation analyses market power potential in the Iranian electricity market as well as in Finland and in the Baltic countries. A new Lerner index is proposed for the pay-as-bid auction. Lerner index and HHI are employed for Finland and the Baltic countries. In addition, the impacts of local energy policies in Finland and Sweden on the neighboring countries are studied in this dissertation. Finland has implemented legislation to phase out coal by 2029. In Sweden, there is an ongoing debate regarding nuclear power. Different scenarios are proposed in this dissertation to analyze the effect of these policies on average electricity prices, CO2 emissions, electricity system cost and electricity trade in Finland, Sweden and the Baltic countries. For this purpose, the models Enerallt and REX are employed to model short-term and long-term future with low CO2 emissions. In the short-term, coal and peat in Finland are replaced with biomass while for 2050, a growing amount of wind power is employed. International transmission expansion is also considered in scenarios for 2050. The results indicate that in Iran market power potential increases during off-peak hours. In Finland, HHI and Lerner index values show that increasing wind power in the electricity market mostly results in less market power potential. However, for the Baltic countries despite the signiﬁcant entrance of wind power in electricity market, they have a highly concentrated market. Results from analyzing the effects of local policies in interconnected markets on the neighboring countries show that national-level policies have impact on wider regions. In the short-term, phasing out coal in Finland may lead to increased electricity import from the wider Nordic market area and even outside it, mostly from regions with carbon-intensive generation. With this policy, among the studied countries only Finland will face a decrease in CO2 emissions in the region, while the rest of the countries will see a small increase. However, the long-term transition to very low CO2 emissions from the electricity production can beneﬁt the Baltic countries. International transmission expansion by 2050 can provide the Baltic countries with an opportunity to have electricity sufﬁciency and export more electricity. Achieving this needs signiﬁcant new investments in wind power capacity.",

keywords = "electricity market modeling, market power, Lerner index, electricity trade, energy policy, wind power, s{\"a}hk{\"o}markkinoiden mallinnus, markkinavoima, Lerner-indeksi, s{\"a}hk{\"o}kauppa, energiapolitiikka, tuulivoima, electricity market modeling, market power, Lerner index, electricity trade, energy policy, wind power",

author = "Anahita Farsaei",

year = "2022",

language = "English",

isbn = "978-952-64-1026-5",

series = "Aalto University publication series DOCTORAL THESES",

publisher = "Aalto University",

number = "170",

address = "Finland",

school = "Aalto University",

}

TY - THES

T1 - Analyzing electricity market efficiency and impacts of renewable electricity

AU - Farsaei, Anahita

PY - 2022

Y1 - 2022

N2 - The EU aims to be climate-neutral by 2050. Achieving net-zero greenhouse gas emissions needsaction in all economic sectors including electricity markets. Electricity market is experiencing a rapid transition to renewable energy especially in the Nordic countries. Although the growing amount of renewables paves the path for climate change mitigation, their effect on market efﬁciency needs to be studied. Furthermore, in an interconnected multi-national electricity market, local energy policies in one country can affect the other countries. This dissertation examines these possible effects. This dissertation analyses market power potential in the Iranian electricity market as well as in Finland and in the Baltic countries. A new Lerner index is proposed for the pay-as-bid auction. Lerner index and HHI are employed for Finland and the Baltic countries. In addition, the impacts of local energy policies in Finland and Sweden on the neighboring countries are studied in this dissertation. Finland has implemented legislation to phase out coal by 2029. In Sweden, there is an ongoing debate regarding nuclear power. Different scenarios are proposed in this dissertation to analyze the effect of these policies on average electricity prices, CO2 emissions, electricity system cost and electricity trade in Finland, Sweden and the Baltic countries. For this purpose, the models Enerallt and REX are employed to model short-term and long-term future with low CO2 emissions. In the short-term, coal and peat in Finland are replaced with biomass while for 2050, a growing amount of wind power is employed. International transmission expansion is also considered in scenarios for 2050. The results indicate that in Iran market power potential increases during off-peak hours. In Finland, HHI and Lerner index values show that increasing wind power in the electricity market mostly results in less market power potential. However, for the Baltic countries despite the signiﬁcant entrance of wind power in electricity market, they have a highly concentrated market. Results from analyzing the effects of local policies in interconnected markets on the neighboring countries show that national-level policies have impact on wider regions. In the short-term, phasing out coal in Finland may lead to increased electricity import from the wider Nordic market area and even outside it, mostly from regions with carbon-intensive generation. With this policy, among the studied countries only Finland will face a decrease in CO2 emissions in the region, while the rest of the countries will see a small increase. However, the long-term transition to very low CO2 emissions from the electricity production can beneﬁt the Baltic countries. International transmission expansion by 2050 can provide the Baltic countries with an opportunity to have electricity sufﬁciency and export more electricity. Achieving this needs signiﬁcant new investments in wind power capacity.

AB - The EU aims to be climate-neutral by 2050. Achieving net-zero greenhouse gas emissions needsaction in all economic sectors including electricity markets. Electricity market is experiencing a rapid transition to renewable energy especially in the Nordic countries. Although the growing amount of renewables paves the path for climate change mitigation, their effect on market efﬁciency needs to be studied. Furthermore, in an interconnected multi-national electricity market, local energy policies in one country can affect the other countries. This dissertation examines these possible effects. This dissertation analyses market power potential in the Iranian electricity market as well as in Finland and in the Baltic countries. A new Lerner index is proposed for the pay-as-bid auction. Lerner index and HHI are employed for Finland and the Baltic countries. In addition, the impacts of local energy policies in Finland and Sweden on the neighboring countries are studied in this dissertation. Finland has implemented legislation to phase out coal by 2029. In Sweden, there is an ongoing debate regarding nuclear power. Different scenarios are proposed in this dissertation to analyze the effect of these policies on average electricity prices, CO2 emissions, electricity system cost and electricity trade in Finland, Sweden and the Baltic countries. For this purpose, the models Enerallt and REX are employed to model short-term and long-term future with low CO2 emissions. In the short-term, coal and peat in Finland are replaced with biomass while for 2050, a growing amount of wind power is employed. International transmission expansion is also considered in scenarios for 2050. The results indicate that in Iran market power potential increases during off-peak hours. In Finland, HHI and Lerner index values show that increasing wind power in the electricity market mostly results in less market power potential. However, for the Baltic countries despite the signiﬁcant entrance of wind power in electricity market, they have a highly concentrated market. Results from analyzing the effects of local policies in interconnected markets on the neighboring countries show that national-level policies have impact on wider regions. In the short-term, phasing out coal in Finland may lead to increased electricity import from the wider Nordic market area and even outside it, mostly from regions with carbon-intensive generation. With this policy, among the studied countries only Finland will face a decrease in CO2 emissions in the region, while the rest of the countries will see a small increase. However, the long-term transition to very low CO2 emissions from the electricity production can beneﬁt the Baltic countries. International transmission expansion by 2050 can provide the Baltic countries with an opportunity to have electricity sufﬁciency and export more electricity. Achieving this needs signiﬁcant new investments in wind power capacity.

KW - electricity market modeling

KW - market power

KW - Lerner index

KW - electricity trade

KW - energy policy

KW - wind power

KW - sähkömarkkinoiden mallinnus

KW - markkinavoima

KW - Lerner-indeksi

KW - sähkökauppa

KW - energiapolitiikka

KW - tuulivoima

KW - electricity market modeling

KW - market power

KW - Lerner index

KW - electricity trade

KW - energy policy

KW - wind power

M3 - Doctoral Thesis

SN - 978-952-64-1026-5

T3 - Aalto University publication series DOCTORAL THESES

PB - Aalto University

ER -

Analyzing electricity market efficiency and impacts of renewable electricity

Abstrakti

Tutkimusalat

YK:n kestävän kehityksen tavoitteet

Pääsy asiakirjaan

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