The electricity sector has traditionally been constructed for large scale generation and distribution from the high-voltage to the low-voltage network. Transition is however underway; intermittent power generation has become less expensive and nuclear power plants are set to close down. A key issue is that intermittent power generation is by definition weather dependent, hence it cannot be planned. Smart grid solutions have the possibility to meet variations in electricity supply and demand and make use of output from intermittent renewable energy through a broad range of products and services, e.g. energy storage and adjustment of electricity production and consumption in strategic times for residential, commercial or industrial end users. Even if the technological solutions exist, these demand side resources have still not been integrated to the market to the extent that is needed. Since they are of such key importance, there is an urgent need to understand the barriers in current market structures as well as to identify opportunities and innovative business models that can bring these resources to the market. An interview study was conducted in order to provide an understanding of the challenges individual companies encounter as they develop business models to integrate their product and service offering into the electricity markets. Additional data was gathered through a literature review of academic papers, market reports and law propositions. The results of the study showed that the business models are currently undergoing stages of 'trial-and-error' to accommodate the specific needs of the electric power system. Actors are trying to prove to the electricity sector that distributed energy resources have a purpose to serve in the electric power system. The actors of these technologies seek to explore various types of value propositions, and sources of income, which to some extent are centered around the sharing of costs and resources with end customers. Furthermore, it would be desirable to align the incentives with the particular distribution network's needs and context to form the basis for the choice of capacity reinforcement. There are clear operational advantages of smart grid technologies, which also reduce profitability related to network capacity. This has to be taken into account and evaluated to encourage cooperation between the parties in the electricity sector. / Elsektorn har traditionellt konstruerats för storskalig produktion och distribution från högspännings- till lågspänningsnätet. En förändring är dock på gång; intermittent kraftproduktion har blivit billigare och kärnkraftverk stängs ner. Ett problem är att intermittent kraftproduktion per definition är väderberoende, så det kan inte planeras. Smarta elnätslösningar gör det möjligt att möta variationer i elförsörjning och efterfrågan, och ta tillvara på produktionen från intermittent förnybar energi genom ett brett utbud av produkter och tjänster, t.ex. energilagring och justering av elproduktion och konsumtion vid strategiska tidpunkter för bostads-, kommersiella eller industriella slutanvändare. Även om de tekniska lösningarna finns, har dessa resurser för efterfrågeflexibilitet ännu inte integrerats i marknaden i den utsträckning som behövs. Eftersom de fyller en viktig funktion är det angeläget att förstå hindren i nuvarande marknadsstrukturer, samt att identifiera möjligheter och innovativa affärsmodeller som kan föra dessa resurser till marknaden. En intervjustudie genomfördes för att förstå de utmaningar som enskilda företag möter när de utvecklar affärsmodeller och integrerar sina produkt- och serviceerbjudanden i elmarknaden. Ytterligare uppgifter samlades in genom en litteraturöversikt av akademiska handlingar, marknadsrapporter och lagförslag. Resultatet av studien visade att affärsmodellerna för närvarande genomgår en fas av 'trial-and-error' för att tillgodose elkraftsystemets specifika behov. Aktörerna försöker bevisa för elsektorn att distribuerade energiresurser har ett syfte att tjäna i elkraftsystemet. De aktörer med dessa teknologier försöker utforska olika typer av värdeerbjudanden och inkomstkällor, som till viss del är inriktade på att dela kostnader och resurser tillsammans med slutanvändarna. Vidare bör incitamenten för det specifika distributionsnätets behov och sammanhang ligga till grund för valet av kapacitetsförstärkning. Det finns tydliga operativa fördelar med smart elnätsteknologi, vilket också minskar lönsamheten relaterat till nätkapacitet. Detta måste beaktas och utvärderas för att uppmuntra samarbeten mellan parterna inom elsektorn.

With the world becoming more conscious about achieving 1.5-degree scenario as promisedby the most powerful economies of the world, much needed push was received by the renewable energy technology providers.  This has led to an increased a share of energy production from renewables and a decrease in the fossil-based energy production with the overall energy production.  As a result, a large share of inertia of the system is lost and a big challenge in the name of flexibility is presented to the world of energy.  Virtual Power Plant is quite a novel and new concept to address the new generation challenge of flexibility and can offer various other benefits like competitivity,reliability, accessibility etc.  In this thesis, a commercial virtual power plant is studied by developing a mixed integer linear model to emulate the trading for short term markets with the risk mea- sures in a Nordic Electricity Framework.  Further, the developed model is implemented in a quite a new mathematical programming language known as “Julia”.  The model is implemented using a hypothetical portfolio consisting of a dispatchable unit, a battery system and a wind farm in the SE3 bidding zone of Sweden.  An investigation on varia- tion of imbalance costs in three different modes also has been carried out, to demonstratethe advantage of such a virtual power plant concept in reducing the imbalance costs. / För att uppfylla 1,5-gradersmålet som beslutats av världens ledande ekonomier har olika‌typer av förnybar energiproduktion fått ett stort uppsving. Detta har lett till ökad energiproduktion från förnybara källor och minskad energiproduktion från fossila källor. För elsystemen innebär en högre andel förnybar produktion minskad svängmassa ochökat behov av flexibilitet för att kompensera för variationen hos förnybara energikällor. Virtuella kraftverk är ett nytt koncept för att tillgodose behovet av flexibilitet och kanäven ge andra fördelar som konkurrenskraft och tillförlitlighet. I denna uppsats studeras ett virtuellt kraftverk genom att utveckla en optimeringsmodell för att emulera handeln i elmarknader med riskmått inom ett ramverk för den nordiska elmarknaden. Modellen implementeras i det nya programmeringsspråket Julia. Modellen innehåller en hypotetisk blandning av resurser bestående av ett planerbart kraftverk, ett batterisystem och en vindpark i elområdet SE3 i Sverige. Balanseringskostnaderna i tre olika modeller undersöks för att visa potentialen hos det virtuella kraftverket att minska dessa kostnader.

Unforeseen changes in production or consumption in power systems lead to changes in grid frequency. This can cause damages to the system, or to frequency sensitive equipment at the consumers. The system operator (SO) is the responsible for balancing production and consumption in the system. The regulating market is the market place where the SO can sell or purchase electricity in order to balance unforeseen events. Producers acting on the regulating market must be able to change their production levels fast (within minutes) when required. Hydropower is therefore suitable for trading on the regulating market because of its flexibility in power production. This thesis describes models that hydropower owners can use to generate optimal bidding strategies when the regulating market is considered. When planning for trading on the market, the prices are not known. Therefore, the prices are considered as stochastic variables. The planning problems in this thesis are based on multi-stage stochastic optimization, where the uncertain power prices are represented by scenario trees. The scenario trees are generated by simulation of price scenarios, which is achieved by using a model based on ARIMA and Markov processes. Two optimization models are presented in this thesis: * Model for generation of optimal bidding strategies for the regulating market. * Model for generation of optimal bidding strategies for the spot market when trading on the regulating market is considered. The described models are applied in a case study with real data from the Nordic power system. Conclusions of the thesis are that the proposed approaches of modelling prices and generation of bidding strategies are possible to use, and that the models produces reasonable data when applied to real data. / Oväntade produktions- eller konsumtionsändringar i kraftsystem leder till ändringar i nätfrekvens. Detta kan orsaka skador på systemet eller på frekvenskänslig utrustning hos konsumenterna. Systemoperatören (SO) är den ansvarige för att balansera produktion och konsumtion i kraftsystemet. Till sin hjälp har SO reglermarknaden, som är den handelsplats där SO köper eller säljer el för att balansera oväntade händelser i systemet. Producenter som agerar på reglermarknaden måste snabbt (inom minuter) kunna ändra sina produktionsnivåer om så behövs. Vattenkraft är därför lämplig för handel på reglermarknaden på grund av dess flexibilitet i kraftproduktion. Denna avhandling beskriver modeller som vattenkraftägare kan använda för generering av optimala budstrategier då reglermarknaden beaktas. När en producents planering för handel på marknaden utförs är marknadspriserna okända. Dessa är därför betraktade som stokastiska variabler. Planeringmodellerna som presenteras i denna avhandling är baserade på multi-periodisk stokastisk programmering, där de osäkra marknadspriserna är representerade av ett scenarieträd. Scenarierna i trädet genereras genom simulering av marknadspriser. En prismodell, baserad på ARIMA- och Markovprocesser, har därför utvecklats. Två olika optimeringsmodeller presenteras i denna avhandling: * Model för generering av optimala budstrategier för reglermarknaden. * Model för generering av optimala budstrategier för spotmarknaden då handel på reglermarknaden beaktas. Modellerna tillämpas i en studie där data från den nordiska elmarknaden appliceras. Slutsatser i avhandlingen är att de föreslagna ansatserna för modellering av priser och generering av budstrategier är möjliga att anvÄanda, samt att modellerna producerar rimliga resultat när applicerade på verkliga data. / QC 20101217

The Texas ERCOT market is one of the most open, deregulated electricity markets in the world. This open market brought electricity costs down for Texas residents and businesses, creating a much more competitive economic climate. However, these low prices currently generate insufficient revenue for generators to finance construction of new or replacement generation assets. In the instance of combined cycle advanced natural gas, the Independent Market Monitor 2012 annual report estimated that a plant needed to generate 2.5 times as much as revenue it did in 2012 to incent new generation. This author argues that while the gap is still significant, the continuous changes to the ERCOT market since its inception make an historical examination like that used by the IMM less accurate. New market rules such as price caps or changes in fuel markets through new technologies like hydraulic fracturing create a very different valuation gap than a model based on historical activity alone. This analysis attempts to get a more accurate approximation of the gap through the use of publicly traded futures contracts for natural gas and electricity. Electricity futures reflect market expectations of revenue based on current and future market rules. Gas futures reflect price expectations in light of market changes like fracturing, potential LNG exports, and other changes. Financial positions can be maintained in both markets to give a fixed rate of return. Using this method, one can create a very conservative valuation model that still more accurately reflects market sentiment. This thesis starts with a brief history of ERCOT deregulation from the early 2000s to present in order to clarify for the reader the changes that have taken place in the market. It then demonstrates the futures-valuation model using an advanced combined cycle power plant as an example. / text

Les marchés de l’électricité sont aujourd’hui en forte transformation, notamment du fait des efforts de libéralisation pour étendre la compétence de gestion du système électrique par le marché. C’est par exemple le cas avec la mise en place de prix nodaux pour gérer les congestions sur le réseau. Par ailleurs, le développement des moyens de production d’électricité d’origine renouvelable met en cause le fonctionnement du système électrique. Dans ce cadre, la question d’investissement pour un producteur éolien se complexifie. Sa rémunération est susceptible à court terme de passer d’un système de subvention, à une rémunération basée sur le produit des ventes sur le marché, fluctuante dans le temps et l’espace (dans le cadre de marchés à prix nodal). Dans ce contexte, ce travail de thèse propose une analyse de l’impact des caractéristiques éoliennes de sites potentiels d’installation, le facteur de charge et la prédictibilité (capacité d’un site à fournir de bonnes prévisions), sur la décision d’investissement. Nous commençons par une analyse statistique pour plusieurs marchés, puis proposons un estimateur du revenu des producteurs éoliens, afin de réaliser le même travail d’une manière moins coûteuse qu’avec un calcul exhaustif. Ensuite, afin de mener ce type d’analyse avec un mix énergétique paramétrable, nous développons un outil de résolution du problème d’optimisation de l’implantation de centrales éoliennes dans un cadre de marché à prix nodal. Il prend en compte une participation au marché de l’électricité la veille pour le lendemain, ainsi que les pénalités versées pour les déviations introduites entre les productions prévues et injectées en temps réel (dues aux erreurs de prévision). Nous faisons l’hypothèse que les productions renouvelables sont suffisamment importantes pour impacter les prix de marché (qui sont également générés avec l’outil), et nous prenons en compte des scénarios pour les productions éoliennes et la demande. Il s’agit donc d’un problème d’optimisation stochastique résolu à l’aide d’une décomposition de Benders. Enfin, nous analysons l’impact du facteur de charge et de la prédictibilité sur l’investissement optimal, selon la configuration pour le coût de la régulation, la capacité des lignes et la corrélation des données éoliennes. / Electricity markets are in a period of intense change. This is notably due to liberalization efforts to increase the extent of electricity system’s management carried out through market operations. One such example is the implementation of nodal prices for network constraints. Moreover, the surge for electricity from renewable sources questions the operation of the electricity system. In this framework, the investment issue for wind producers is becoming more complex. Its income may go from a subsidy-based scheme to a full market participation in the short term, and more volatile according to time and location (in a nodal-pricing scheme). Bearing all this in mind, this PhD work first analyzes the impact of potential installation sites’ characteristics: load factor, and predictability (a site’s ability to enable reliable predictions), on investment. To this end, we carry out a statistical analysis on historical data from several markets, then we suggest an estimator of wind producers revenue, to carry out the same work with a less costly approach than exhaustive calculation. Then, in order to carry out the same kind of analysis, this time in a customizable framework, we build an algorithm to solve the problem of Optimal investment planning of wind turbines within a nodal price market environment. It takes into account the participation in the Day-ahead market as well as penalties paid for imbalances between the energy contracted and injected in real-time (due to forecasting errors). We assume renewable production is important enough to influence market prices which are also generated with our model, and we integrate scenarios for wind production and demand. Therefore we have a stochastic problem which we solve using Benders decomposition. Ultimately we analyze the impact of load factor and predictability on optimal investment according to the chosen setting for regulation cost, line capacities and wind data correlation.

L'évolution du marché intérieur de l'électricité en France suit la vague de libéralisation auxquelles un certain nombre de services publics ont été soumis notamment sous l'impulsion du droit de l’Union européenne. La production et la fourniture d'électricité à tous les clients ne constituent plus un monopole légal, les activités de production, de transport, de distribution et de fourniture d'électricité se doivent d'être désormais juridiquement séparées et un régulateur du marché indépendant de l'Etat d'être mis en place. Cependant, ces modifications structurelles intervenues dans le secteur de l'électricité n'ont eu qu'un impact relatif sur l'activité de distribution. Ainsi, celle-ci reste maintenue sous le monopole de l'opérateur historique Electricité Réseau de France et par dérogation des quelques entreprises locales de distribution. Or cette situation apparaît contestable au regard du droit de l’Union européenne, mais également de la théorie générale du droit des contrats administratifs français et il semble, dès lors, difficilement envisageable qu'elle puisse être maintenue en l'état. Se pose donc, avec acuité, la question de l'ouverture à la concurrence de la distribution publique d'énergie électrique et plus largement, celle de l'accès à ces réseaux de distribution.L’activité de distribution publique d’électricité ne peut être appréhendée sans tenir compte des activités exercées en amont et en aval. Les opérateurs des activités sur les marchés de la production et de la fourniture doivent avoir accès aux réseaux de distribution. Le système actuel, sous le contrôle du régulateur national, donne satisfaction et permet l’accès des tiers aux réseaux de distribution dans des conditions transparentes et non discriminatoires, notamment par le biais de mécanismes de péréquation. En outre, la gestion du réseau est assurée de manière cohérente à une maille suffisamment élargie permettant des économies d’échelle et garantissant le rôle des collectivités territoriales, autorités organisatrices de la distribution publique d’électricité.Enfin, une ouverture à la concurrence de l’activité aurait pour conséquence de complexifier le système, de multiplier les coûts afférents et ne présenterait que des impacts très limités en terme d’amélioration tarifaire. En tout état de cause, elle impliquerait une refonte du système mis en place. / The evolution of the internal electricity market in France is following the wave of liberalization at the instigation of the European Union law. However, the electricity distribution system is maintained under the monopoly of the national historical operators. Even if this situation seems questionable, the current system, under the control of the national regulator, is satisfactory, allows third parties to access to the distribution networks under transparent and non discriminatory conditions and assures tariff equalization essential to the balance between territories. In addition, the management of the electrical network is provided consistently at an appropriate scale allowing mutualisation of infrastructure costs and ensuring the role of local authorities. An opening to competition of the activity would result in a more complex system and would present only a very limited impact in tenns of better pricing. In any case, it would imply an overhaul of the established system.

O conjunto de leis, decretos e instrumentos regulatórios que regem o setor elétrico a partir da virada deste século é bastante complexo. Em paralelo, o desafio constante da expansão da oferta de energia elétrica para o atendimento da demanda sempre crescente de um país em desenvolvimento como o Brasil requer análise profunda de seu arranjo institucional. Adicionalmente, a expansão da oferta também depende do desenvolvimento de ferramentas para melhorar a gestão dos ativos de geração de energia elétrica que irão atender esse desafio. Neste contexto, o presente trabalho se propõe a fazer um mapeamento dos principais componentes de incerteza e risco associados à geração de energia elétrica no Brasil sob o ponto de vista regulatório. Analisa, assim, o modelo em vigor desde a promulgação da Lei 10.848 de 2004, o qual promove a competição entre fontes de energia de natureza complementar, mas com características distintas. No percurso deste estudo são discutidos instrumentos para avaliar o arranjo das unidades de geração em um portfolio de ativos de fontes diversas, bem como seus principais componentes e, em que medida, a regulação em vigor favorece a sinergia entre as diferentes fontes de geração elétrica. Na medida em que este arranjo setorial se baseia na contratação de energia elétrica de longo prazo, os resultados deste trabalho indicam que a sinergia desejada entre as fontes de geração de energia elétrica fica restrita apenas ao mercado de curto prazo, extremamente volátil, conquanto poderia ser aproveitada no desenho de um portfolio mais eficiente, tanto para o país quanto para os investidores em geração. / The set of laws, decrees and regulatory instruments leading the electricity sector in the new century is quite complex in Brazil. In parallel, the constant challenge of expanding the supply of energy to meet the ever increasing demand of a developing country requires a deep analysis of this institutional configuration designed to simplify the understanding of the sector major issues and improve the management assets to generate electricity that will meet this challenge. This work intends to map the key uncertainty and risk components associated with power generation in Brazil under the regulatory perspective. To do so, it analyzes the model in place since the enactment of Law #10,848 in 2004 which promotes the competition among energy sources with different characteristics. In the course of the text here presented it is conducted a discussion about the tools designed to evaluate the selection of power plants in a portfolio of assets from different energy sources, analyzing its main components, and the synergy level among these different sources. Additionally, it is also addressed the regulatory environment and its implications for the power industry in Brazil. Through this study it was found that the extent to which this regulatory arrangement is based on long term power purchase agreements, the desired synergy between sources of power generation is restricted to the highly volatile spot market, although it could be used in designing a more efficient portfolio, both for the country and for investors in generation.

A competitive electricity market has been established in many European countries including the Czech Republic. The electricity market includes a limited number of significant producers and traders, which can be described by oligopoly model. Since the electricity transmission and distribution are regulated, I consider two types of players performing in the electricity market: producers of electricity and traders, who buy electricity from producers and sell it to final customers. I derive oligopoly model with producers and traders "a la Cournot" and calculate a formula of equilibrium strategies. I use these theoretical findings to build a dynamic oligopoly model Ele. Ele is formulated as a mixed complementary problem and calibrated on data for the Czech Republic and neighbor states for several scenarios. The model was specified and calculated in GAMS software by the PATH solver. The results represent a Nash equilibrium. That means for individual producers: electricity generation, investment in new power plants construction and emission permits purchases. For traders the results are: equilibrium purchases, sales and cross-border transfers of electricity in each particular time period. Ele derives also equilibrium regional wholesale and retail electricity prices, emission permit prices and prices of cross-border auctions. Ele results point to an economic profitability of new nuclear power plants constructions. Further, I formulate a game in short-term electricity market, where I advise to Czech market participants, subjects of settlement, how much and in which circumstances to buy or sell electricity. Equilibrium results obtained through simulations based on the principle of a fictive game show that the current payment system of imbalance in the Czech Republic does not increase the risk of instability of electricity networks.

O modelo de comercialização de energia elétrica operante no Brasil é fruto da reestruturação do Setor Elétrico Brasileiro (SEB), que se iniciou na década de 90. Este modelo atual, mais estruturado, impulsionou os investimentos privados no setor nos últimos anos, fazendo com que a comercialização de energia se tornasse algo de grande representatividade dentro do setor elétrico. Este modelo de comercialização como é hoje, dividido em dois ambientes, dinâmico e em constante evolução, é alvo de inúmeros investidores, principalmente no Ambiente de Contratação Livre (ACL) onde o número de agentes cresceu consideravelmente nos últimos anos, e gerou movimentações financeiras recordes. Associado a este crescimento expressivo, os riscos inerentes de mercado também se mostram relevantes e de fundamental necessidade de gerenciamento para o equilíbrio financeiro do investidor. Dessa forma, este trabalho propõe uma análise acerca da comercialização de energia no mercado brasileiro, quanto ao gerenciamento do risco por parte de um agente gerador operando no ACL, através da implementação de um otimizador contratual que ajude na tomada de decisão de quanta energia destinar a cada contrato, de modo a maximizar a receita do agente a um risco controlável. / The present marketing model of electric power in Brazil is the result of the restructuring of the Brazilian Electric Sector (BES), which began in the 90s. This current model, somewhat more structured, stimulated private investment in the sector in recent years; this way the electric power´s market acquired substantial representation within the electricity sector. The current market model, having two different commercial environments, dynamic and constantly evolving, has been attracting many investors, especially in the Free Contracting Environment (FCE) where the number of agents has grown considerably in recent years, and generated record number of financial transactions. Associated with this significant growth, the inherent risks in this market are effectively of concern and need being managed to ensure the financial balance of the investor. Therefore, this work proposes an analysis about the energy trading in the Brazilian market, as to the management of risk by an agent generator operating in the FCE, through the implementation of a contract optimizer that helps in making decisions on how construct a contract portfolio in order to maximizes the agent revenue under a controllable risk.

Since the late 1980s, the energy sector in Great Britain has undergone some core changes in its functionality; beginning with the early 1990s privatisation, followed by an increased green ambition, and commencing a transition towards a low-carbon economy. As the British energy sector prepares itself for another major overhaul, it also puts itself at risk for not being sufficiently prepared for the consequences this transition will have on the existing generating capacity, security of supply, and the national electricity market. Upon meeting existing targets, the government of the United Kingdom risks becoming complacent, putting energy regulation to the backseat and focusing on other regulatory tasks, while introducing cuts for thriving renewable and other low-carbon energy generating technologies. The government has implemented a variety of directives, initiatives, and policies that have sometimes been criticised due to their lack of clarity and potential overlap between energy and climate change directives. The government has introduced policies that aim to provide stable short-term solutions. However, a concrete way of resolving the energy trilemma and some of the long-term objectives and more importantly ways of achieving them are yet to be developed. This work builds on analysing each low-carbon technology individually by assessing its past and current state in the British energy mix. By accounting for the changes and progress the technology underwent in its journey towards becoming a part of the energy capacity in Great Britain, its impact on the future wholesale electricity prices is studied. Research covered in this thesis presents an assessment of the existing and incoming low-carbon technologies in Great Britain and their individual and combined impact on the future of British energy economics by studying their implications for the electricity market. The methodological framework presented here uses a cost-minimisation merit order model to provide useful insights for novel methods of electricity production and conventional thermal energy generation to aid with the aftermath of potential inadequate operational and fiscal flexibility. The thesis covers a variety of scenarios differing in renewable and thermal penetration and examines the impact of interconnection, energy storage, and demand side management on the British wholesale electricity prices. The implications of increasing low-carbon capacity in the British energy mix are examined and compared to similar developments across Europe. The analysis highlights that if the optimistic scenarios in terms of green energy installation are followed, there is sufficient energy supply, which results in renewable resources helping to keep the wholesale price of electricity down. However, if the desired capacity targets are not met, the lack of available supply could result in wholesale prices going up, especially in the case of a natural gas price increase. Although initially costly, the modernisation of the British grid leads to a long-term decrease in wholesale electricity prices and provides a greater degree of security of supply and flexibility for all market participants.