Congestion management in the Nordic power market : nodal pricing versus zonal pricing

In the Nordic day-ahead electricity market zonal pricing or market splitting is used for relieving congestion between a predetermined set of price areas. This congestion management method represents an aggregation of individual connection points into price areas, and flows in the actual electricity network are only partially represented in the market clearing. Because of several strained situations in the power system during 2009 and 2010, changes in the congestion management method are under consideration by the Norwegian regulator NVE. We discuss three different congestion management methods – nodal pricing, and optimal and simplified zonal pricing. Four hourly cases from 2010 are used to illustrate the effects of different congestion management methods on prices, surpluses and network utilization

Peak price hours in the Nordic power market winter 2009/2010: effects of pricing, demand elasticity and transmission capacities

The Nordic electricity market experienced extremely high prices during the winter 2009/2010. Using real data from the peak price hours the zonal solution from the Nordic market is replicated and compared to the nodal price solution when the central grid and its physical characteristics are explicitly modelled. Demand elasticity is introduced to the bid curves and its effect on prices and network utilisation is studied for the nodal solution. The sensitivity of the zonal solution to the changes in aggregate transfer capacities is investigated. The results demonstrate that better system utilisation is possible without capacity expansion. Nodal pricing solutions compared to the actual zonal pricing mechanism give insights into how the system functions in strained capacity situations and what hinders a more efficient system utilisation

Simulation of congestion management and security constraints in the Nordic electricity market

Presently in the Nordic day-ahead market, zonal pricing or market splitting is used for relieving congestion between a predetermined set of price areas. Constraints internal to the price areas are resolved by counter trading or redispatching in the regulation market. In a model of the Nordic electricity market we consider an hourly case from winter 2010 and present analyses of the effects of different congestion management methods on prices, quantities, surpluses and network utilization. We also study the effects of two different ways of taking into account security constraints

Peak price hours in the Nordic power market winter 2009/2010: effects of pricing, demand elasticity and transmission capacities

The Nordic electricity market experienced extremely high prices during the winter 2009/2010. Using real data from the peak price hours the zonal solution from the Nordic market is replicated and compared to the nodal price solution when the central grid and its physical characteristics are explicitly modelled. Demand elasticity is introduced to the bid curves and its effect on prices and network utilisation is studied for the nodal solution. The sensitivity of the zonal solution to the changes in aggregate transfer capacities is investigated. The results demonstrate that better system utilisation is possible without capacity expansion. Nodal pricing solutions compared to the actual zonal pricing mechanism give insights into how the system functions in strained capacity situations and what hinders a more efficient system utilisation

A Nodal Pricing Model for the Nordic Electricity Market

In the Nordic day-ahead electricity market zonal pricing or market splitting is used for relieving congestion between a predetermined set of bidding areas. This congestion management method represents an aggregation of individual connection points into bidding areas, and flows from the actual electricity network are only partly represented in the market clearing. Because of several strained situations in the power system during 2009 and 2010, changes in the congestion management method have been considered by the Norwegian regulator. In this paper we discuss nodal pricing in the Nordic power market, and compare it to optimal and simplified zonal pricing, the latter being used in today’s market. A model of the Nordic electricity market is presented together with a discussion of the calibration of actual market data for four hourly case studies with different load and import/exports to the Nordic area. The market clearing optimization model incorporates thermal and security flow constraints. We analyze the effects on prices and grid constraints and quantify the benefits and inefficiencies of the different methods. We find that the price changes with nodal pricing may not be dramatic, although in cases where intra-zonal constraints are badly represented by the aggregate transfer capacities in the simplified zonal model the nodal prices may be considerably higher on average and vary more than the simplified zonal prices. On the other hand nodal prices may vary less than the simplified zonal prices if aggregate transfer capacities are set too tightly. Allowing for more prices in the Nordic power market would make dealing with capacity limits easier and more transparent

Market power in a power market with transmission constraints

In this paper we present a model for analysing the strategic behaviour of a generator and its short run implications on an electricity network with transmission constraints. The problem is formulated as a Stackelberg leader-follower game. The upper level problem is generator’s profit maximisation subject to the solution of the lower level problem of optimal power flow (OPF) solved by system operator. Strategic bidding is modelled as an iterative procedure where the supply functions of the competitive fringe are fixed while the strategic player’s bids are changed in a successive order until the bid giving maximum profit is found. This application rests on the assumption of supply function Nash equilibrium when the supplier believes that changes in his bids will not influence other actors to alter their bid functions. Numerical examples are presented on a simple triangular network

Simulation-Based Evaluation of Upstream Logistics System Concepts for Offshore Operations in Remote Areas

Increased competition and low oil prices coupled with promising prospects for new oil and gas (O&G) reserves in the Arctic region has led to expansion of activities into the offshore Arctic. This brings along new challenges for the offshore logistics that need to be addressed. These challenges impose more stringent requirements for the logistics system setup, especially on the design and operation of vessels. Copying the logistics system and vessels designed for the North Sea operations is not a sustainable way forward. The few existing studies related to Arctic logistics mainly focus on ship technology solutions for cold and ice infested areas or solutions to the area-specific operational challenges for shipping companies. However, there is a need to understand how these solutions are connected and impact each other in a larger offshore supply logistics system, and thus address the challenges of Arctic logistics as a whole. A methodology for quick evaluation of the feasibility and costs of the logistics system in the early stages of offshore supply planning was developed and presented in previous research [1]. It allows for testing the effects of using alternative ship designs and the overall supply fleet composition on system’s cost and performance while satisfying prospective campaign requirements. Safety standards and requirements for emergency preparedness and environmental performance are taken into account while cost effectiveness of the logistics system as a whole is the main quantifiable measure. Building on the new methodology a simulation tool for remote offshore operations has been developed and is presented in current work. Simulation models allow us to consider the dynamic and uncertain nature of variables, such as variation in weekly transport demand, weather impact on sailing times and fuel consumption, and schedule deviations. The evaluation of the performance of a logistic system is done by simulating the logistic operation over a large number of scenarios. Input parameters are weather data generated from historical observations and probability distributions for transport demand. Output from the tool are key performance indicators for: system costs, logistic robustness and emergency preparedness. The tool consists of three main components: simulation of a regular supply logistics operation, simulation of emergency situations, and visualization of the simulated operations. The proposed methodology and tool are tested on real-life cases for offshore supply planning of drilling campaigns in remote areas for one of the major international O&G operators.acceptedVersio

Technological and environmental challenges of Arctic shipping - a case study of a fictional voyage in the Arctic

Shipping in Arctic seas is challenging and poses an environmental risk. This paper presents a fictional case involving a multipurpose supply vessel transporting one large object (a 750-tonne compressor) and 24 containers loaded with chemicals and equipment for use by the petroleum industry in western Siberia. With technical details representative of vessels navigating the Arctic today, the fictitious ship Oleum has an ice class sufficient for navigating unaccompanied in the Barents and Kara seas, so no assistance is in range when, in late October, clogged fuel filters cause engine failure and the vessel eventually drifts ashore. Heeling over, Oleum loses both cargo and marine diesel oil. The scenario includes a successful helicopter rescue of the 16 crewmembers and a partial recovery of oil and chemicals by booms and skimmers. Recovery of chemicals with physical properties not allowing mechanical collection is not attempted. The scenario ends as the abandoned wreck is broken down at the stranding location, and containers rupture and discharge their cargo. The scenario postulates a moderate and short-lived environmental impact. The most visible effects of the grounding are the hull itself, the compressor and the spreading effects and degradation of oil and chemicals unmanageable for the clean-up operations.publishedVersio

Technological and environmental challenges of Arctic shipping - a case study of a fictional voyage in the Arctic

Shipping in Arctic seas is challenging and poses an environmental risk. This paper presents a fictional case involving a multipurpose supply vessel transporting one large object (a 750-tonne compressor) and 24 containers loaded with chemicals and equipment for use by the petroleum industry in western Siberia. With technical details representative of vessels navigating the Arctic today, the fictitious ship Oleum has an ice class sufficient for navigating unaccompanied in the Barents and Kara seas, so no assistance is in range when, in late October, clogged fuel filters cause engine failure and the vessel eventually drifts ashore. Heeling over, Oleum loses both cargo and marine diesel oil. The scenario includes a successful helicopter rescue of the 16 crewmembers and a partial recovery of oil and chemicals by booms and skimmers. Recovery of chemicals with physical properties not allowing mechanical collection is not attempted. The scenario ends as the abandoned wreck is broken down at the stranding location, and containers rupture and discharge their cargo. The scenario postulates a moderate and short-lived environmental impact. The most visible effects of the grounding are the hull itself, the compressor and the spreading effects and degradation of oil and chemicals unmanageable for the clean-up operations