A higher share of renewable energy in power generation is one of most ambitious goals for sustainable development under the increasing pressure of climate change. On the deregulated electricity market in Sweden, the consumers are able to choose their electricity from a specific supplier and a specific energy source, which gives them the opportunity to execute their consumer power to have positive impacts on increasing energy efficiency and renewable electricity generation by stopping buying electricity produced from fossil fuels. A new paradigm is thus proposed in this paper which provides a new perspective on purchase of the product electricity. The new paradigm makes electricity a specified product for a specific customer, the electricity audited is never mixed with that not audited, because all electricity which is audited can be traced. The aim of this study is to provide a greater understanding of the new paradigm on the deregulated electricity market. By conducting a willingness to pay survey and several deep interviews, it analyzed the main factors hindering the customers’understanding of the new market dynamics in terms of active choice in ‘green’ electricity and stopping buying fossil electricity. The results and discussions show that the new paradigm could facilitate shedding light on some important implications for strategic decision making in power companies, for policy-makers as well as customers.

There are many companies operating in the current electricity market and new companies are still forming. This gives every consumer an option to choose a company selling electricity. Electricity dealers can even buy or sell electricity from abroad. Although this situation seems to be natural, it's very complicated to achieve. It's necessary to follow a lot of rules and business processes to be able to establish a functional liberalized market. Because of the amount of business processes it's obvious that liberalized market depends first of all on information systems. However, to develop an information system is usually big investment and it is necessary to find some way to cut the information systems prices. This thesis introduces an effective way of system development for the electricity market domain. This method is introduced as Model Driven Development (MDD) methodology. The idea promoted by MDD is to use models to describe programs and automation code generators to transform models into source code. Model creation is obviously much faster than writing source code, which makes software development more effective. In the category of supporting MDD tools, Damas Energy platform is introduced. The main goal of this thesis is to analyze the usability of Damas Energy with MDD and to show which method to choose when developing information systems for the electricity market domain.

In the first essay I examine whether the occurrences of the extreme price events display any regularities that can be captured using an econometric model. Here I treat these price events as point processes and apply Hawkes and Poisson autoregressive models to model the dynamics in the intensity of this process. I use load and meteorological information to model the time variation in the intensity of the process. The models are applied to data from the Australian wholesale electricity market, and a forecasting exercise illustrates both the usefulness of these models and their limitations when attempting to forecast the occurrence of extreme price events. In the second essays I explain that in the past doubts have been raised as to whether the pre-dispatch process in Australia Electricity Market is able to give market participants and market operator good and timely quantity and price information. It is the purpose of the second essay to introduce a framework to analyse whether the pre-dispatch process is delivering biased predictions of the actual wholesale spot price outcomes. Here I investigate the bias by comparing the actual wholesale market spot price outcome to pre-dispatch sensitivity prices established the day before dispatch and on the day of dispatch. I observe a significant bias (mainly indicating that the pre-dispatch process tends to underestimate spot price outcomes) and I further establish the seasonality features of the bias across seasons and/or trading periods. I also establish changes in bias across the years in our sample period (1999 to 2007). In the formal setting of an ordered probit model I establish that there are some exogenous variables that are able to explain increased probabilities of over- or under-predictions of the spot price. It transpires that meteorological data, expected pre-dispatch prices and information on past over- and under-predictions contribute significantly to explaining variation in the probabilities for over- and under-predictions. The results allow me to conjecture that some of the bids and re-bids provided by electricity generators are not made in good faith. Finally, the third essay investigates whether information from this pre-dispatch process can be useful when predicting next-day price spikes. In a preliminary analysis I establish the effect of pre-dispatch prices on the quantiles of the spot price distribution. A Quantile regression approach reveals that higher pre-dispatch prices signal only to a certain extent an increased probability of higher spot price outcomes. They also signal a higher uncertainty about the resulting spot price outcomes. I further establish whether the inclusion of information from the pre-dispatch process can significantly improve the predictability of price spikes when these are modelled as a point process (as in the first essay). The models used here are Hawkes and Poisson autoregressive models which allow for time variation (correlated to exogenous information) in the intensity process that governs the occurrence of price spikes. It transpires that the pre-dispatch process of the Australian Electricity Market does not provide any information that can be used in a systematic manner to help predicting on what days price spikes are more likely to occur.

Production of electric energy is continuously affected by many factors. Therefore, tools for predicting the future production are needed. In turn, the production affects the electric energy price, which is set on electric energy exchanges. This thesis is intended to find out if the software SDDP can be used for hydrothermal power production simulations in the Nord pool area. By building a simplified model of the electric energy production in Sweden with a focus on hydro, thermal and wind power, the intention is to see how the model is affected by different conditions. The investigated conditions are several; higher and lower water inflows to the hydro power reservoirs; different amounts of installed wind power production; different price levels of emission allowances for CO2. By using the simulation software SDDP, more wind power was seen to lower the electric energy prices, as well as reduce the need of transmission of power from the northern to the southern parts of Sweden. In the simulation, Sweden was divided into four areas, connected where the main bottlenecks in the power grid are located. Water inflows to the reservoirs are crucial in the model. Actual inflow data can be bought from SMHI. However, due to the limited thesis budget, estimations were constructed instead. The estimations were difficult to make and turned out to be too high. Consequently, no reliable evaluation of the SDDP software could be done using this data.

Drastic changes have taken place in UK electricity policy over recent years as government has sought to address the challenges associated with energy security, affordability and commitments to reduce carbon emissions. This study investigates the underlying policy changes between the year 2000 and 2012, particularly the Electricity Market Reform, as the most fundamental transformation in the British power market since liberalisation, almost three decades ago. It illustrates that although this policy had revised the long legacy of market-based and technology neutral electricity policymaking, it was yet to be claimed as a wholesale paradigmatic shift, because, as of 2012, it still suffered from a form of paradigm ambivalence and socio-technical lock-in. Furthermore, this research identifies an accumulative process of policy change explaining how a complex set of dynamics transformed the UK electricity policy mix. The thesis relies empirically on conducting 53 semi-structured interviews as well as scrutinising policy documents and relevant secondary studies. The thesis draws relevant approaches within policy studies that attend to address continuity and change in policy frameworks, in particular the Advocacy Coalition Framework (Sabatier 1999) and Policy Paradigm (Hall 1993) perspectives. The study contributes to this literature in three distinctive ways. First, it questions the adequacy of existing frameworks for conceptualising policy change in ‘large-technical’ and ‘techno-centric’ subsystems, such as electricity policy. In return, it introduces technology preference, as a policy component capturing the socio-technical elements of electricity policymaking. Second, to explain why and how such significant changes had been undergone, it forms a bridge between the characteristics of policy change and the extent that existing policies are perceived as irreconcilable policy failures. By this, it, albeit, moves beyond the conventional typology of change drivers in policy literature. Third, this research extends the emerging concept of negotiated agreement and policy compromise as a pathway to evolutionary changes (Sabatier & Weible 2007). Inspired by Institutional Change theory (Mahoney & Thelen 2010), it proposes that compromised policies are often at the risk of policy reversibility and retrenchment, subject to any shift in the contextual conditions they have originated in. Overall, the thesis provides an understanding of one of the very complex and contemporary cases for studying policy change theories.

Renewable Energy is by nature intermittent and matching the supply of energy to specific time dependent demand poses huge challenges. Energy storage is a useful tool in handling this temporal disparity, although except for regions very suitable for pumped hydroelectric storage schemes, it suffers from being technically difficult to implement and costly as a result. This study investigates the potential benefits offered by various scales of energy storage to different types of renewable energy generation. It also explores the economic drivers behind energy storage operating as part of an electricity spot market. A stochastic optimisation algorithm for determining the maximum possible arbitrage revenue available to energy storage devices is presented and schedule of operation of storage acting in this manner is analysed. The schedule of operation for maximising the revenue is compared to the schedule of operation for minimising the fuel cost to the network and it is demonstrated that because prices are more volatile than the demand which drives them, storage devices do not always act to decrease the fuel cost to the network. It is shown that storage behaving in the right manner can offer significant benefits to electricity systems, and increases the usage of base-load generation, reducing peak electricity demands and the need for expensive peaking plants. The value of storage also increases as the penetration of renewable energy generation increases, although the current electricity market framework is perhaps not the best way to encourage this behaviour. Advanced Adiabatic Compressed Air Energy Storage (AA-CAES) is also identified as a theoretical storage option which deserves further scrutiny. Using thermodynamic modelling the efficiency of this type of system is estimated in the range of 63-67%, and we suggest that this may be increased closer to 73% by using direct contact heat exchangers rather than indirect contact heat exchangers (and a separate thermal fluid), as described in the currently available literature. However, dealing with large pressure ranges (leading to large variations in pressure ratios) encountered in the expansion process is a problematic area which will have to be resolved before this type of system can be constructed with “off-the-shelf” components. Some small scale experiments are used to gain valuable insights into a AA-CAES system. While these suffer from a very low overall efficiency, they highlight the effect of variable pressure ratio on expander efficiency. We conclude that AA-CAES is thermodynamically sound and will be achieved one of two ways: either through the construction of expanders that can work with high efficiency over large pressure ratios, or by resolving the engineering issues with maintaining a constant storage pressure.

L’achèvement du marché intérieur de l’électricité réside dans la construction effective d’un ordre concurrentiel. Le droit de la concurrence constitue, en principe, l’unique norme d’encadrement du marché. Or, les nombreux dysfonctionnements concurrentiels dévoilent un bilan contrasté de la libéralisation. Ces résultats sont imputés à l’existence et à l’introduction de règlementations nationales, à l’instar de la tarification, qui affectent la transition concurrentielle du marché. Vingt ans après la décision d’ouvrir le marché à la concurrence, il n’existe pas un marché de l’électricité mais des marchés de l’électricité. Des normes de régulation sont donc introduites, en tant que technique d’accompagnement du phénomène d’ouverture à la concurrence et instrument correctif aux différentes failles de marché. S’ensuit un droit de la régulation de l’électricité aux côtés d’un droit de la concurrence. Mais cette régulation résulte également d’impératifs exogènes et endogènes au marché. L’électricité n’est pas une marchandise comme les autres. L’essentialité du bien électrique et ses externalités environnementales induisent un encadrement spécifique du marché. La protection du consommateur, la protection de l’environnement et la sécurité d’approvisionnement sont donc régies par des normes de régulation, voire des règlementations, aux incidences sur la transition concurrentielle. Source de complexité et d’incohérences juridiques, la plurifonctionnalité de l’électricité affecte le projet d’un ordre strictement concurrentiel du marché / The completion of the internal electricity market depends on the effective construction of a competitive order. Competition law acts therefore as the sole market framework standard. However, the numerous competitive inefficiencies reveal a mixed record of liberalisation. These results are attributed to the existence and introduction of national regulations, such as pricing, which affect the competitive transition of the market. The electricity market is thus marked by a dispute between member states and the European Union. Twenty years after the decision was made to open the market to competition, there is not an electricity market but several electricity markets. Regulatory standards are therefore introduced to complement the opening to competition and fix the various market failures. Introduced ab initio as a transitional and supplementary law, the multiplication of regulatory standards and the enhancement of their scope of application give them a market framework role. This creates a regulation law alongside competition law on the electricity market. But this regulation also results from exogenous and endogenous imperatives to the market. Electricity is not a commodity like others. The essentiality of the electric good and its environmental externalities shape a specific market framework. Consumer protection, environmental protection and security of supply are therefore governed by regulatory standards, or even regulations, which have an impact on the competitive transition. The electricity market is thus confronted with many legal inconsistencies. The multifunctionality of electricity affects the project of a strictly competitive market order

The power balance of an electrical power system is crucial to the quality of the delivered electricity as well as the security of supply. In a scenario where Swedish nuclear power plants are being phased out and replaced by renewable energy sources new constraints are added to the power balance equation since the production of many renewable energy sources, such as wind and solar power, are intermittent by nature. This leads to a situation where the currently available regulating power might have difficulties to manage the increasing frequency fluctuations in the power grid. One possible solution to the problem is to build gas turbines for the purpose of peak power generation capacity. An alternative option would be to increase customer flexibility; that is Demand Response. This master thesis investigates how the market for Demand Respond can be designed and which potential Demand Response volumes different policy programs might release. This is done through a mixed approach. Firstly, a scientific review of previously documented Demand Response experiences compares and categorizes different Demand Response programs in a typology based on the parameters cost, volume and feasibility. Subsequently an interview series with different market agents, predominantly through interviews with the Swedish energy intensive industry, identifies the existing Demand Response potential in Sweden and offers the paradigm needed to transfer the results to a future hypothetical situation. The typology of Demand Response programs and estimation of the future industrial Demand Response potential in Sweden are the main new knowledge contributions of this master thesis. The scope however is limited to the Swedish market geographically and focuses on the time horizon 2020-2050. It is also assumed that only existing technologies are likely to be implemented on a large scale over the given time horizon. The results of this master thesis suggest that a Real Time Pricing model would realize the largest potential of Demand Response and to a relatively low cost. This solution however requires actions and further development of both the pricing model and in technology. Firstly, all market agents must have free access to real time price information, something that is lacking today. Secondly, a smart grid with hourly meters is required. If policymakers consider security of supply to be more important than a low system cost, Direct Control or a continuation of the Strategic Reserve is to be preferred according to the conclusions of this report. Previous studies have placed the existing potential for industrial Demand Response in Sweden between 600 and 900 MW. This report suggests that the available volume is in the upper region of the mentioned interval already today and has potential to rise significantly in the future as industries become more aware of the concept and the transmission grid is becoming more flexible. Another driving force for increased Demand Response volumes are the increased price fluctuations which are expected as a consequence of a greater share of renewable energy sources. For the future Demand Response potential, a cost perspective is introduced and a distinction between different response durations is made. More specifically the results indicate that the potential industrial Demand Response volume will be about 1,500 MW in 2030, given a response duration time of 4 h and a spot price on 2,000 SEK/MWh. If 1,500 MW of peak generation capacity could be avoided through active Demand Side Management, it would reduce the system cost with about 350 Million SEK annually. Consequently, there is a business case for Demand Response and the issue is likely to be subject to further investigation and discussion in the future. On the long term however industrial Demand Response must be compared with other flexibility options, e.g. as import/export or energy storages but also residential Demand Response, and is in such case likely to be outcompeted due to its relatively high variable cost of providing capacity.

On the one hand, the demand response management and dynamical pricing supported by the smart grid had started to lead to fundamentally different energy consumption behaviours; On the other hand, energy supply has gone through a dramatic new pattern due to the emergence and development of renewable energy resources. Facing these changes, this thesis investigates one of the resulting challenges, which is how to integrate the wholesale market and the retail market into one framework in order to achieve optimal balancing between demand and supply. Firstly, based on the existing mechanisms of the wholesale and retail electricity markets, a simulation tool is proposed and developed. This enables the ISO to find the best balance between supply and demand, by taking into account the different objectives of the generators, retailers and customers. Secondly, a new market mechanism based on the interval demand is proposed in order to address the challenges of the unpredictable demand due to the demand response management programs. Under the proposed new market mechanism, the corresponding approaches are investigated in order to support the retailers to find their profit-optimal pricing strategies, the generators to develop their best bidding strategies, and the ISO to identify the market clearing price function in order to best balance supply and demand. In particular: 1) For the ISO, our designed mechanism could effectively handle unpredictable demand under the dynamic retail pricing. It also enables the realisation of the goals of dynamic pricing by utilising smart meters; 2) In the retail market, we extend the smart pricing model in the current research in order to enable the retailers to find the most-profitable pricing scheme under the proposed new mechanism with the demand-based piecewise cost (i.e., market clearing price) function; 3) For the wholesale market, we developed a pricing forecasting model in order to forecast a market clearing price. Based on this model, we analysed the optimal bidding strategies for a generator under an interval demand from the ISO. Simulation results are provided in order to verify the effectiveness of the proposed approaches.

This Master Thesis conducts a survey of the process of the liberalization of the electricity market, exclusively in the context of the European Union. The method of the review of the contemporary literatury is used to analyze reforms in the electricity supply industry. The thesis provides readers with the basic characteristics of the liberalization of this strategic net industry. The main focus is on one particular reform-unbundling- as it influences all principles of the eletricity energy markets. Scholars argue there are direct advantages and at the same time direct disadvanatges resulting from these reforms and it is almost impossible to find a clear agreement on if positive or negative effects prevails. In the thesis there is an attempt to evaluate whether contemporary research literature is able to decide if the liberalization reforms will bring about pure benefits for participants of the electricity markets.