50% Wind Power in Denmark 50% Wind Power ... - Ea Energianalyse

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50% Wind Power in Denmark 50% Wind Power ... - Ea Energianalyse

50% Wind Power in Denmarkand Power Market IntegrationLars Bregnbæk and Jesper WerlingEa Energy AnalysesEa Energy Analyses


50% Wind in Denmark by 2025• How does 50% wind power in Denmark affectthe electricity market in Northern Europe?• What is the impact on commercial investmentsin the market?• What are the costs and benefits of 50% windpower?• How does it affect the adequacy issue?Ea Energy Analyses


Model analysis• Denmark and neighbouringicountries• 2 scenarios:– Investments governed bymarket incentives– Market + 50% wind targetBalmorel electricity market model:• Optimal dispatch within themarket framework• Endogenous investments ingeneration capacityEa Energy Analyses


Central assumptions60%Historic Development andTarget for Wind Power in Denmark60%Ratio of Wind Power inNeighbouring Countries in 202550%50%40%40%30%30%20%20%10%10%0%1985 1995 2005 2015 20250%Finland Norway Sweden Germany• Fuel prices as WEO 2006 (52$/barrel), CO 2 price 20 €/ton• 3% annual al decommissioning + German nuclear phase-out• Danish wind power limited by grid expansion planEa Energy Analyses


Model investmentsEa Energy Analyses


Electricity prices in DenmarkDuration curve for electricity prices i 2010 og 2025700city price (k kr./MWh)Electri600500400300200Average prices 2025Reference:48.7 Euro/MWhWind scenario: 44.4 Euro/MWh10001 331 661 991 1321 1651 1981 2311 2641 2971 3301 3631 3961 4291 4621 4951 5281 5611 5941 6271 6601 6931 7261 7591 7921 8251 85812010 Reference 2025 Wind 2025Ea Energy Analyses


Costs and benefitsmEuro/year Denmark Whole areaReducedgenerationcosts 17 16Gridinfrastructure ‐32 ‐32• Generation costsresultant from modelanalysisf • Grid infrastructure fromseparate analysisReduction incost ofenvironmentalimpact (SO2and NOx) 18 105Total gain 3 89• Environmentalexternalities based onCAFE and ExternE, E andmodel emissionsEa Energy Analyses


Key issues:Wind Power Integration• Generationintermittency– Taken into account bythe model• Production gradient– Disregardedd• Uncertainty20%18%16%14%12%10%6%– Assumption of4%increasing balancing 2%0%costsRamping for Danish wind power in 2006Relative change from hour to hour8%~ 600 MW/hour in 2025costs 1 1001 2001 3001 4001 5001 6001 7001 8001Ea Energy Analyses


Model results and the adequacy issue (1/2)• Supplementary analyses of 30% and 40% wind in 2025• The model calculates the impact on thermal investments in the windpower scenarios30 pct. 40 pct. 50 pct.wind wind windNew investments in windpower capacity (MW)Reduced investment inthermal capacity comparedto the reference scenario(MW)Replaced thermal capacity /new wind power3,589 4,539 5,670943 1,132 1,4590.263 0.249 0.257• The investments in wind power displaces 0.25 MW thermal investments pr. MWwind• The effect on adequacy depends on the capacity value of wind power• Example: Nordel sets the capacity value to 6%.Ea Energy Analyses


Model results and the adequacy issue (1/2)IEA: “In a market with no specific capacity measure the capacity cost orvalue of wind power is reflected in the prices in the market”Model results 2025:Efficient Efficientcoal plant bio plant2015 2020 2025Wind land2020 2025Wind seaExtra cost of wind power compared to coal plant• 30%: 1.3 Euro/MWh• 40%: 3.4 Euro/MWh• 50%: 5.4 Euro/MWhEa Energy Analyses


Main conclusions• 50% wind power in Denmark can be integrated t withouttsubstantial grid investments – but more congestion willoccur• When including environmental externalities the socialeconomy comes out positive.• The main prerequisite is an efficient electricity market –open international trade.• Market based investments will change. Adequacy can bereduced in the long term if capacity value of wind isbelow 25%. Else increased.Ea Energy Analyses

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