Opportunity cost assessment of hydropower reserve providers
Partners: ETHZ (FEN), Swiss Economics
Duration: 09/2022 - 10/2022
Funding: ElCom
Project Leader: Swiss Economics. FEN is responsible for cost calculations.
Project Team: Dr. Turhan Demiray, Dr. Adamantios Marinakis, Dr. Alexander Fuchs, Dr. Jared Garrison
external pageElCom press releasecall_made (German)
external pageElCom press release for the third and the final round 2023call_made (German)
Based on projections of expected fuel prices (notably natural gas) and availability of power generation units (notably nuclear) in Europe, we quantified the revenue potential for Swiss hydro storage power plants, by participation in the wholesale market in 2023. This analysis served as a basis in order to, in collaboration with Swiss Economics, support ElCom in assessing the competitiveness of bids it received by hydro storage plant operators offering their capacity to the Swiss hydropower reserve scheme set by ElCom.
Due to the special winter situation in 2022/23, the hydropower reserve provided for in the revision of the Electricity Supply Act was introduced ahead of schedule. The aim was to cover unforeseen supply bottlenecks towards the end of winter.
ElCom needed an independent quantitative analysis, to assess to which extent the bids handed in by the various Swiss hydro power plant operators can be explained by the expected wholesale electricity prices and the auction behavior of the players.
- FEN: Estimation of 2023 hourly day-ahead prices (HPFC) at the time of the suppliers' closing date. The HPFC was calculated by properly calibrating FlexECO, a model which mimics the market clearing process, based on last year’s market clearing results.
- FEN: Determination of optimal power plant deployment under uncertainty for different types of hydropower plants
- FEN: Calculation of the opportunity costs of different hydropower plants
- Swiss Economics: Analysis of the possible auction behavior of the suppliers
- SE & FEN: Estimation of total costs for different call volumes
- SE & FEN: Assessment of the assumptions made in the individual modelling steps
- SE & FEN: Recommendations to ElCom
[Tool: in-house FlexECO]