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Flexible supply mee...
Flexible supply meets flexible demand : prosumer impact on strategic hydro operations
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- Hassanzadeh Moghimi, Farzad (author)
- Stockholms universitet,Institutionen för data- och systemvetenskap
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Chen, Yihsu (author)
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- Siddiqui, Afzal S., 1975- (author)
- Stockholms universitet,Institutionen för data- och systemvetenskap,Aalto University, Finland
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(creator_code:org_t)
- 2023
- 2023
- English.
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In: Computational Management Science. - 1619-697X .- 1619-6988. ; 20:1
- Related links:
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https://doi.org/10.1...
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https://urn.kb.se/re...
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Abstract
Subject headings
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- Ambitious climate packages promote the integration of variable renewable energy (VRE) and electrification of the economy. For the power sector, such a transformation means the emergence of so-called prosumers, i.e., agents that both consume and produce electricity. Due to their inflexible VRE output and flexible demand, prosumers will potentially add endogenous net sales with seasonal patterns to the power system. With its vast hydro reservoirs and ample transmission capacity, the Nordic region is seemingly well positioned to cope with such intermittent VRE output. However, the increased requirement for flexibility may be leveraged by incumbent producers to manipulate prices. Via a Nash-Cournot model with a representation of the Nordic region’s spatio-temporal features and reservoir volumes, we examine how hydro producers’ ability to manipulate electricity prices through temporal arbitrage is affected by (i) VRE-enabled prosumers and (ii) the latter plus a high CO22 price. We find that hydro reservoirs could exploit prosumers’ patterns of net sales to conduct temporal arbitrage more effectively, viz., by targeting periods in which prosumers are net buyers (net sellers) to withhold (to “dump”) water. Meanwhile, a higher CO22 price would further enhance hydro reservoirs’ market power because flexible price-taking thermal plants would be unable to ramp up production in order to counter such producers’ strategy to target VRE’s intermittency. Hence, in spite of a flexible demand side to complement additional intermittent VRE output, strategic hydro producers may still exacerbate price manipulation in a future power sector via more tailored exercise of market power.
Subject headings
- NATURVETENSKAP -- Data- och informationsvetenskap -- Systemvetenskap, informationssystem och informatik (hsv//swe)
- NATURAL SCIENCES -- Computer and Information Sciences -- Information Systems (hsv//eng)
Keyword
- Game theory
- Market power
- Hydropower
- Prosumer
- Variable renewable energy
- data- och systemvetenskap
- Computer and Systems Sciences
Publication and Content Type
- ref (subject category)
- art (subject category)
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