Environmental Engineering Reference
In-Depth Information
2.1.
Energy Prices and Market Structures
Competitive energy prices in a globalised world require a mix of multiple sources of
energy. This is in fact a prerequisite in order to keep the energy generation process cost
efficient. Shortage of components or resources will increase the price of a given energy
generation method, if there is major concurrent demand. Renewable energy systems are
therefore likely to be more expensive to install, whereas they are cheaper to operate. This
is also due to fear of increasing prices of fossil fuel, further destruction of our environment
and climate change.
The different marginal costs for different generation is another argument that points to-
wards highly mixed energy systems. The future of energy will therefore most likely contain
a more complex mixture of energy generation and development, possibly with the exception
of regions with excessive resources of one particular energy source. Consequently, we have
to expect that the electricity systems are going to become more complex to manage.
There is a strong trend that the society is in favour of supporting new developments of
renewable energy and in particular non-scheduled intermittent sources such as wind energy.
We therefore focus on how to keep a sustainable price for wind power. The optimisation
strategies that will be presented hereafter may result in higher energy prices in the short-
term, but a relatively lower energy price in the long-term compared to non-cost optimisation
scenarios. The optimisation target here is therefore to the benefit of the entire society, but
first of all to the current wind farm owners in markets, where wind power is frequently the
price maker.
There may be other valid optimisation targets such as minimal emissions. This would
however favour nuclear energy and lead to the dependency on one natural resource, un-
known issues regarding the nuclear waste and therefore risk of high energy prices. In addi-
tion, nuclear energy is not a flexible energy generation mechanism, which could effectively
complement the intermittent energy units. Either the nuclear or the intermittent generator
would have to generate less power than they potentially could, each one at their standard
marginal cost.
3.
Optimisation Objectives
Production incentives naturally help to increase the amount of renewables. These in-
centives are typically defined on the national level. The incentives are in most cases not
important for the optimisation problem, but they may encourage a phase shift of the gener-
ation by using a storage unit and thereby maximising the production while the market price
is highest instead of delivering power when the intermittent power generation is natively
highest.
3.1.
Market Considerations
Differences in the market structures, politically defined support systems, demand pro-
files and the inertia level of the scheduled power generation does make the optimisation
problem specific for each region, if not even for each end-user. However, there are some
basic difficulties, which all markets will experience once the volume of intermittent energy
 
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