Market Requirements for Pumped Storage Profitability: Expected Costs and Modelled Price Arbitrage Revenues, Including a Case Study of Juktan
Independent thesis Advanced level (professional degree), 20 credits / 30 HE creditsStudent thesis
The rapid integration of intermittent renewable energy sources (IRES) has caused a growing demand for power system flexibility on energy markets all over Europe.
Being the only commercially proven large scale energy storage technology, pumped storage hydro power (PSHP) has by several studies been suggested as an efficient solution to mitigate the impact of IRES. However, despite the perceived technical demand profitability remains as a major obstacle for PSHP development.
In this study, a market requirement for PSHP profitability, defined in terms of price volatility, is presented. Considering capital and operational expenditures as well as modelled potential price arbitrage revenues for a greenfield PSHP plant, it may be used as a tool for initial assessments of PSHP profitability in relation to market outlooks or modelled future prices. The results have further been used in a case study, where the price volatility required to motivate a restoration of the now decommissioned Swedish PSHP plant Juktan has been determined.
The results show that the high capital expenditures characterising PSHP development do comprise in a high risk for developers; while feasibility depends on the sustainment of a highly volatile price climate during several decades, energy markets are often extremely uncertain.
Place, publisher, year, edition, pages
2013. , 63 p.
UPTEC ES, ISSN 1650-8300 ; 13032
energy storage, pumped storage hydro power, price arbitrage, intermittent integration, price volatility, market requirements
Energilager, pumpkraft, prisarbitrage, integrering av intermittent generering, marknadsförutsättningar, prisvolatilitet, lönsamhet
IdentifiersURN: urn:nbn:se:uu:diva-210136OAI: oai:DiVA.org:uu-210136DiVA: diva2:661286
Master Programme in Energy Systems Engineering
Kaisinger, ReinhardCarlsson, Fredrik
Lundin, UrbanPernestål, Kjell