Intersection of national renewable energy policies in countries with a common power market

Abstract

The EU energy policy aims to establish an EU-wide common power market through market couplings and cross-border grid expansions. The outcome of such international power markets may intersect with national renewable energy policies. To analyze this case, we introduce a market-based multi-region energy systems model to investigate the mutual impacts of energy transitions in a group of interconnected countries. The proposed model is a combination (hard-linking) of a multi-region power market model and hourly energy systems modeling of each constituent region. The case of Nordic power market with highly coupled areas, a high share of hydropower, and interlinked heating and power sectors (e.g., by combined heat and power plants (CHP) and district heating) is examined. According to the results, predicted targets for integration of variable renewable energy (VRE) in one country (Finland) can be counterbalanced by changes in the energy policy of interlinked countries (e.g. by nuclear power phase-out in Sweden). Comparing cross-border transmission lines versus local electricity storage suggests that domestic flexibility is 5 times more efficient in reducing wind curtailment in this case. The cost of such energy storage is, however, 90% higher than electricity sales from respective VRE integration. This calls for international, coordinated joint efforts in energy planning to guarantee an optimal utilization of energy resources and maintaining required flexibility for integration of renewable energy in such coupled regions at minimum cost.