Cross-border Electricity Trade Research Articles

Medium-term assessment of cross border trading potential of Nepal's renewable energy using TIMES energy system optimization platform

Hydropower holds the largest renewable share in global electricity supply and will remain as a key technology for greenhouse gas mitigation in future. Rapid deployment of hydropower projects without storage has created the risks of hydropower generation far exceeding electricity demand in coming years in Nepal. This paper attempts to assess the volume of such surplus energy by proposing the Integrated MARKAL-EFOM System (TIMES) based framework suitable to estimate excess energy in renewable predominated system with detailed representation of hydropower. This study presents surplus renewable generation as Cross Border Electricity Trade (CBET) potential to show how instrumental CBET can be to avoid renewable energy curtailment with case study of Nepal. The results suggest Nepal not only can avoid 99.4 TWH of hydropower curtailment and financial loss of 500 billion Nepalese Rupees but also can reduce 81.5 million tons of CO2 equivalent emissions in India by 2030 using CBET policy instrument, however, timely construction of planned cross-border transmission lines is essential to reap the full benefits.

Modelling low carbon electricity generation of an integrated ASEAN power grid

In 1997, 10 economies of the Association of Southeast Asian Nations (ASEAN) established the ASEAN Power Grid (APG), a cross-border interconnection network that effectively uses regional energy resources. This study aims to quantify the effect of ASEAN power grid interconnection on electricity exports-imports between south-east Asia economies and its implications for renewable energy shares and carbon emission in power generation. Three scenarios are assessed in this model. The Base Scenario simulates APG parameters in 2030, considering four existing interconnections and those interconnection projects currently under construction. The second scenario, HAPUA Scenario, includes all the future interconnection projects outlined in the HAPUA report. The carbon tax scenario as the last scenario, aims to evaluate whether carbon pricing policies in Southeast Asia may incentivise cleaner energy and renewable energy development in the region. Under the HAPUA Scenario, Indonesia increases coal and/or gas-fired generation for electricity exports, contributing to a slight increase in CO2 emissions from power generation for the ASEAN region. It appears that carbon price affects the choice of electricity generation and incentivise cross-border electricity trade. Under the carbon tax scenario, emissions will decline to 719 MtCO2 or 22% lower than the base scenario and 24% than the HAPUA scenario.

Electrification of multi-energy hubs under limited electricity supply: De-/centralized investment and operation for cost-effective greenhouse gas mitigation

• Decarbonization via electrification is effective, economic, advisable, challenging. • Limited centralized electricity alters optimal design of new de-/centralized assets. • Multi-objective MILP finds pareto-optimal V2G EVs and mix of converters, storages. • Full year hourly resolution allows for detailed grid and asset operational analysis. • Cost and emission breakdown reveal dominance of embodied emission and upfront cost. Electrification of residential's heating and private mobility is often seen as a cure-all solution to the sector's immense greenhouse gas (GHG) emission problem. However, the necessary supply of affordable, secure, and sustainable centralized electricity is commonly assumed unlimited in related planning efforts. Hence, it remains unclear how beneficial electrification is under limited supply. Therefore, we investigate how jointly planned de-/centralized asset upgrades and Vehicle-2-Home enabled electric vehicles can overcome such limitations exemplarily for five residential building types in Switzerland. Thereto, the proposed, novel optimizations of Multi-energy Systems based on the Energy Hub concept, which extend the classical decentralized Energy Hub perspective to include investments into centralized assets, simultaneously select, design, and operate such assets and vehicles to minimize lifecycle-emissions and -costs while covering thermal, electrical and mobility demands under scenarios of A) unlimited, B) three partially limited, and C) no (stand-alone) centralized electricity. The optimizations prove the centralized supply limitations to be crucial, as achievable CO 2eq mitigations halve on average from A) >60% over B) 45% to only C) 30%. Further, a substantially altered and wide mix of assets is optimal to overcome the identified sole supply bottleneck of electrical energy scarcity during winter. Transitioning from low-cost to low-emission solutions, natural gas based centralized gas turbines and decentralized combined heat and power plants (CHPPs) combined with air-source heat pumps are displaced by biogas CHPPs, ground source heat pumps and centralized photovoltaics, while local photovoltaics and Vehicle-2-Home usage are constants. Surprisingly, all partially limited scenarios including nuclear phase-out and additional cross-border electricity trade stops yield similar results, which enable emission mitigations of 50% over the non-electrified reference without additional annualized cost. Stronger emission mitigation proves prohibitively costly. Overall, considering limited supply avoids overestimation of achievable emission mitigation, underestimation of total costs as well as identification of too simplistic asset portfolios.

Hydropower Pricing Options for Cross-Border Electricity Trading in China Based on Bi-Level Optimization

Regional cross-border electricity trading is popular in price and cooperation. It is a reliable path to alleviate the shortage of power supply during rapid economic growth. As an important export commodity, the pricing options for hydropower directly relate to the cooperation intention of business parties. This study demonstrates the price formation methods and internal relationships of cascade hydropower stations in CBET. To simulate the decision-making of a bilateral forward contract, a bi-level optimization model was constructed, and the objectives of each layer represent the interests of both parties. The BOM was linearized with Karush-Kuhn-Tucker conditions and strong duality, and finally solved using mixed-integer linear programming. The prices of CHSs in southwestern China were calculated under different pricing options and the results were absorbed in an actual transaction case. Consequently, the complementarity between different exporting countries was verified. The most suitable pricing option for CBET was determined, that is the unified electricity price based on the marginal cost, to be 481 CNY/MW∙h, which is 20% to 60% higher than the thermal and photovoltaic from other countries. Furthermore, national policy support and economic subsidies are key guarantees for the sustainable development of CBET, which can reduce the discount electricity price to below that of thermal generation by 30%.

Investigation on opportunities and challenges of cross-border electricity trade for Iran

Energy demand in Iran is increasing because of many reasons, for instance, low price, population and GDP growth. Its trend shows that this situation could not continue for many years, so it needs reviewing in energy policy in Iran. The aim of this paper is reviewing the whole energy system of Iran and its possible future and offering some policies for solving current and future problems. First of all, this study investigates the trend of growth of some parameters like GDP, electricity price, population, CO2 emission and electricity consumption in eight years. After that, by calculating the price of electricity generated in Iran under three different circumstances, this study is able to investigate the electricity and natural gas trade according to the price of them. Studying the renewable energy effects on CO2 emission reduction, subsidy reduction and water saving lead this study to prepare and policy offer. At the end of this paper, results show there is a lack of idea in energy economic in Iran, and two policies will be offered by considering this aspect.

Structure Characteristics and Influencing Factors of Cross-Border Electricity Trade: A Complex Network Perspective

Electricity is one of the most widely used forms of energy. However, environmental pollution from electricity generation and the mismatch between electricity supply and demand have long been bothering economies across the world. Under this background, cross-border electricity trade provides a new direction for sustainable development. Based on the complex network approach, this paper aims to explore the structural characteristics and evolution of cross-border electricity trade networks and to figure out the factors influencing the formation of the network by using the more advanced network analysis method—ERGM. The results show that: (1) The scale of the electricity trade network is expanding, but there are still many economies not involved. (2) The centrality of the network shifts from west to east. The level of internal electricity interconnection is high in Europe, and Asian countries’ coordination role in cross-border electricity trade networks is enhanced. (3) Cross-border electricity trade helps to reduce CO2 emissions, achieve renewable energy transformation, and reduce power supply and demand mismatch. Large gaps in GDP, electricity prices, industrial structure, geographical distance and institutional distance between economies are not conducive to form the cross-border trade network, while the common language is on the contrary.

Toward a fundamental understanding of flow-based market coupling for cross-border electricity trading

• Provision of a guide to the main steps and parameters of flow-based market coupling. • Learning goals to help readers understand actions by transmission system operators. • Provision of an open-access model (code and data) based on free-to-use software. • Case studies and sensitivity analyses based on a modified 118-bus IEEE network. • Quantifying effects of generation shift keys, critical lines and security margins. Trading electricity across market zones furthers competitive power prices, security of supply and the integration of renewable energy. In the European Union, flow-based market coupling is the target model to compute correct trading capacities between markets, while approximating physical grid constraints. The methodology relies on predictive, carefully designed parameters to maximize trading opportunities, while keeping congestion management at acceptable levels. This paper explains the fundamentals of flow-based market coupling. It provides an open-access model based on a test network and its data. By providing a guide to the theory and conducting several case studies, the functioning and effects of the most influential parameters are demonstrated. Innovative aspects of this paper are its illustrative nature and its answer to the following research questions: (1) What is the effect of (a) generation shift keys and (b) threshold choice on the selection of critical network elements? (2) What is the effect of (a) generation shift keys, (b) selected critical network elements and (c) security margins on market coupling and congestion management results? It also addresses the effect of higher shares of renewable energy and minimum trading capacities on flow-based market coupling. This analysis shows that (1) the effects of flow reliability margins and selected critical network elements dominate the effect of generation shift keys on flow-based market coupling domains, (2) power systems with an increasing share of renewable energy may necessitate re-adjusted parameters and (3) minimum trading capacities can be guaranteed by redispatch or altering the base case.

The effects of cross-border electricity trade on power production from different energy sources

In this study, we provide empirical evidence to emphasize the crucial role of cross-border electricity trade for decreasing the use of fossil fuels in power industries and attaining higher electricity supply from solar and wind energy sources. We collected data for 48 countries across three continents (Americas, Europe and Asia) from 1991 to 2018 to create a world sample that would reflect the diversity of various energy mixes in different electricity markets. We showed the existence of long-term relationships between power production from natural gas, solar, wind and the level of cross-border electricity trade. Later on, we conducted panel data analyses that utilize the fixed-effect approach with interactive variables. The empirical evidence reveals that when electricity production from solar and wind energy sources interacts with cross-border electricity trade, the rate of power production from natural gas decreases statistically significantly. Furthermore, we created efficiency indices for solar and wind energy sources and to provide evidence for the increased utilization of solar and wind electricity production in the presence of cross-border electricity trade. The resulting empirical evidence reveals that for countries with positive economic growth, a rise in the levels of cross-border electricity trade leads to more efficient electricity production from solar and wind energy sources.

The role of cross-border electricity trade in transition to a low-carbon economy in the Northeastern U.S

Canadian hydropower resources offer a potentially attractive option for meeting decarbonization targets in the US Northeast region, where there are ambitious climate goals and nearby hydro resources in Quebec. Existing transmission capacity is, however, a limiting factor in expanding hydropower imports to the region. To examine the value of expanding transmission capacity from Quebec to the Northeast, we employ an integrated top-down bottom-up modeling framework (USREP-EleMod). This research was part of an Energy Modeling Forum effort, EMF34, with a goal of better characterizing linkages in energy markets across North America. The scenarios we examine exogenously expand transmission capacity by 10, 30, and 50% above existing capacity into the US Northeast (New York/New England), finding the value to the economy of these expansions ranging from $.38-$.49 per kWh imported into New York, and $.30-$.33 per kWh imported into New England by 2050. The scenarios include economy-wide emissions goals these states have set for themselves. The carbon limits we imposed raise fuel prices more than electricity prices and as a result we found greater electrification in the US Northeast region from 2030 onward, a result that one would not see using just an electricity sector model, demonstrating a main hypothesis of EMF34, that models that looked at more integration across energy markets would give deeper insight than more narrowly focused models.

The role of hydropower in South Asia’s energy future

ABSTRACT With rising energy demand in Asia, the high potential for hydropower development and the need for low-carbon energy development, hydropower would seem to have a significant role in South Asia’s energy future. However, the extent of hydropower development will depend on several risk factors, including the cost of alternative energy sources, the environmental sustainability of hydropower and social issues of equitable development. Using a risk-analysis framework, it is concluded that the future of hydropower will depend on how well policies and institutions manage the risks, facilitate efficient financial markets, and promote fair and friendly cross-border electricity trade.

A review of challenges from increasing renewable generation in the Indian Power Sector: Way forward for Electricity (Amendment) Bill 2020

About 70% of India’s current energy mix comprises of coal, and the increase in generation from renewable (RE) sources is affecting the health of the power system. We investigated this effect through the lens of asset utilisation, cost and the social disruption caused by accelerating RE into the Indian Power System. Our review-driven analysis revealed that increasing RE generation is pushing the coal plants to operate in low-loading conditions, causing heightened wear and tear of the plant as they are not suitable for flexible operation. The novel analysis of social disruption due to market parity between RE and coal-based generation presented a holistic view of the political economy of Indian Power System. We found that transition from coal to RE may have extended socio-political ramifications that can potentially disrupt the national economy at an unprecedented scale. Policy implications outlined by our study for the draft Electricity (Amendment) Bill 2020 include scoping a socio-technical framework which supports just energy transition through better financial support mechanisms for flexible operation of coal plants. Focusing on clean-up over shut-down of coal plants and facilitating investments in battery storage technologies and cross-border electricity trade as RE and conventional fuel reach market parity.

Cross-Border Electricity Trading in Southeast Europe Towards an Internal European Market

The European Commission’s Target Model’s main objective is to integrate European electricity markets, leading to a single internal energy market and guaranteeing the instantaneous balance between electricity generation and demand. According to the target model for electricity trading, proposed by the European Network Transmission System Operators for Electricity (ENTSO-E), within each zone, electricity can be traded freely without taking into consideration network limitations. In contrast, for cross-border trading, the exchanges with other market areas are taken into account. Cross-border trade poses a further burden on the interconnection lines, resulting in increasing network congestion, which in turn restricts electricity trading. Thus, calculating the available capacity for trade has a significant ramification on the market. Today, the Available Transfer Capacity (ATC) mechanism dominates cross-border trading, but this methodology may be replaced by the Flow-Based (FB) approach across Europe. This paper investigates both approaches regarding the cross-border congestion management under the market coupling procedure. In our case study, the Southeast Europe (SEE) region is taken into consideration; it consists of both the FB and ATC approach in a five country (Greece, North Macedonia, Bulgaria, Serbia, and Romania) scenario. The purpose of our tests is to perform, compare, and evaluate the effectiveness of each method for the SEE region, while the main findings are the maximization of social welfare, better cross-border trading opportunities, and price convergence via the FB method.

The impact of neighboring markets on renewable locations, transmission expansion, and generation investment

Many long-term investment planning models for liberalized electricity markets either optimize for the entire electricity system or focus on confined jurisdictions, abstracting from adjacent markets. In this paper, we provide models for analyzing the impact of the interdependencies between a core electricity market and its neighboring markets on key long-run decisions. This we do both for zonal and nodal pricing schemes. The identification of welfare optimal investments in transmission lines and renewable capacity within a core electricity market requires a spatially restricted objective function, which also accounts for benefits from cross-border electricity trading. This leads to mixed-integer nonlinear multilevel optimization problems with bilinear nonconvexities for which we adapt a Benders-like decomposition approach from the literature. In a case study, we use a stylized six-node network to disentangle different effects of optimal regional (as compared to supra-regional) investment planning. Regional planning alters investment in transmission and renewable capacity in the core region, which affects private investment in generation capacity also in adjacent regions and increases welfare in the core region at the cost of system welfare. Depending on the congestion-pricing scheme, the regulator of the core region follows different strategies to increase welfare causing distributional effects among stakeholders.

A robust distributed market-clearing model for multi-area power systems

The importance of cross-border electricity trading is common knowledge in the modern energy markets. As proved in different studies, a centralized market structure has the most efficiency in the profit maximization point of view. However, it is not possible to make a centralized decision-making structure, owing to the privacy of data for each area, and the large-scale problem should be solved. In this paper, a new market-clearing scheme is proposed for multi-area power systems, including both traditional and renewable power generation units based on the Optimality Condition Decomposition (OCD) approach. The proposed framework needs neither coordination nor monitoring entities and uses a small number of data that should be interchanged between the areas. Also, a Single-Stage Robust Programming method is used to tackle the general uncertainties of the large-scale power systems, such as load consumption profiles and wind units’ generations. Finally, the proposed structure is tested through simulating on a standard three-area test case, and the efficacy, adequacy, and accuracy of the results are confirmed using various analyses.

Estimating Power Sector Leakage Risks and Provincial Impacts of Canadian Carbon Pricing

Carbon pricing systems have emerged in Canada at provincial and federal levels to reduce CO2 emissions. However, cross-border electricity trade with the U.S. is already extensive, and although Canada is currently a net exporter, policy changes could alter these trade dynamics. Since CO2 emissions are currently unregulated in many U.S. states, there is a concern that this incomplete regulatory coverage will lead to emissions leakage, as electric generation and emissions shift toward these unregulated regions. This paper examines potential power sector emissions leakage and distributional implications across provinces from Canadian carbon pricing. Using an integrated model of electric sector investments and operations with detailed spatial and temporal resolutions, the analysis demonstrates how emissions leakage through trade adjustments can be non-trivial fractions of the intended emissions reductions even in the presence of leakage containment measures. Magnitudes of long-run leakage rates from Canadian carbon pricing depend on market and policy assumptions (e.g., natural gas prices, projected load growth, long-run demand elasticities, timing of future U.S. CO2 policy), ranging from 13% (high gas price scenario with border carbon adjustments) to 76% (lower gas price scenario without antileakage measures), which are higher than reported literature values for national policies. When leakage containment measures are implemented, net emissions and leakage rates decrease, but gross emissions in Canada and policy costs increase. Leakage persists in alternate scenarios with constrained transmission expansion, higher natural gas prices, lower load growth, higher price elasticities of demand, and U.S. adoption of carbon pricing, but leakage rates decrease under these conditions.

The Impact of Regional Power Trade on CO2 Emissions in the Greater Mekong Sub-region

The Greater Mekong Sub-region (GMS) is a natural economic area bound together by the Mekong River, and the GMS member countries includes Cambodia, the People’s Republic of China (PRC, Yunnan Province and Guangxi Zhuang Autonomous Region), Lao People’s Democratic Republic (Lao PDR), Myanmar, Thailand, and Viet Nam. In recent years, with the economic growth of the Greater Mekong Sub-region countries, the demand for electricity has been growing rapidly, and that might lead larger CO2 emissions. Fortunately, there are abundant hydroelectric power resources in this region, and huge potential for complementarity in the supply and demand of electricity among countries. In this paper, an economic optimal dispatching model for thermal and hydroelectric generating units is introduced, and the effects of interconnections and cross-border power trade on the CO2 emissions in the Greater Mekong Sub-region are investigated. Finally, through a concrete example, it can be proved that after the implementation of interconnection and cross-border electricity trade in the Greater Mekong Sub-region, the CO2 emissions will be greatly reduced.

Market Design for Multilateral Trade of Electricity in ASEAN: A Survey of the Key Components and Feasibility

The member states of ASEAN have together identified a need to develop the ASEAN Power Grid and enable the multilateral cross-border trade of electricity in a coordinated manner within ASEAN. This has been set out in the ASEAN Plan of Action for Energy Cooperation (APAEC) 2016–25. Moving forward from the current situation, this paper reviews the key components and feasibility of establishing an interconnected and competitive multilateral electricity market within the ASEAN countries. An indicative roadmap is developed based on an in-depth survey of experts to profile an appropriate market design for the multilateral trade of electricity in the ASEAN.

Transition towards decarbonised power systems and its socio-economic impacts in West Africa

Pathways towards a defossilated sustainable power system for West Africa within the time horizon of 2015–2050 is researched, by applying linear optimisation modelling to determine the cost optimal generation mix to meet the demand based on assumed costs and technologies in 5-year intervals. Six scenarios were developed, which aimed at examining the impact of various policy constraints such as cross-border electricity trade and greenhouse gas emissions costs. Solar PV emerges as the prime source of West Africa’s future power system, supplying about 81–85% of the demand in the Best Policy Scenarios for 2050. The resulting optimisation suggests that the costs of electricity could fall from 70 €/MWh in 2015 to 36 €/MWh in 2050 with interconnection, and to 41 €/MWh without interconnection in the Best Policy Scenarios by 2050. Whereas, the levelised cost of electricity without greenhouse emission costs in the Current Policy Scenario is 70 €/MWh. Results of the optimisation indicate that a fully renewables based power system is the least-cost, least-GHG emitting and most job-rich option for West Africa. This study is the first of its kind study for the West African power sector from a long-term perspective.

Granger Causality Network Methods for Analyzing Cross-Border Electricity Trading between Greece, Italy, and Bulgaria

Italy, Greece, and, to a lesser degree, Bulgaria have experienced fast growth in their renewable generation capacity (RESc) over the last several years. The consequences of this fact include a decrease in spot wholesale prices in electricity markets and a significant effect on cross border trading (CBT) among neighboring interconnected countries. In this work, we empirically analyzed historical data on fundamental market variables (i.e., spot prices, load, RES generation) as well as CBT data (imports, exports, commercial schedules, net transfer capacities, etc.) on the Greek, Italian, and Bulgarian electricity markets by applying the Granger causality connectivity analysis (GCCA) approach. The aim of this analysis was to detect all possible interactions among the abovementioned variables, focusing in particular on the effects of growing shares of RES generation on the commercial electricity trading among the abovementioned countries for the period 2015–2018. The key findings of this paper are summarized as the following: The RES generation in Italy, for the period examined, drives the spot prices in Greece via commercial schedules. In addition, on average, spot price fluctuations do not affect the commercial schedules of energy trading between Greece and Bulgaria.

Congestion displacement in European electricity transmission systems – finally getting a grip on it? Revised safeguards in the Clean Energy Package and the European network codes

During the last three decades, the European Union has worked on creating a pan-European internal market for electricity, aiming to establish an ‘Energy Union’ of unrestricted cross-border electricity trade. Under the ‘Clean Energy for all Europeans Package’ and the European network codes, the legal framework for the electricity sector has recently received a comprehensive update. However, electricity trade between the Member States is still severely limited due to insufficient transmission capacity on cross-border interconnectors. One reason is that network operators restrict cross-zonal capacity in order to relieve congestion inside the domestic grids, effectively pushing congestion to the border. This practice entails partial market foreclosure and is of vast practical significance, but has only received limited attention from energy law scholars. Since the borders between the Member States remain obstacles to the free trade of electricity despite political endeavours and extensive regulation of the electricity sector, one might ask whether the legal framework on congestion management in electricity networks provides sufficient incentives to relieve congestion where it occurs, that is, within the congested network. To answer this question, this study will scrutinise the pertinent provisions of EU energy law – with a particular focus on recent revisions under the Clean Energy Package and the European network codes – against the background of several case studies. The objective is to identify relevant legal, economic and political contributing factors and assess whether EU energy law addresses them adequately.