Development of an Electricity Spot Market Model based on Aggregated Supply and Demand Functions for Future Solar and Wind Power Deployment

This master thesis aims to develop an electricity spot market model for simulating hourly day-ahead market prices, and use it to study future deployment scenarios for solar and wind power as well as the potential of nuclear phase out in the Swedish and the whole Nordic and Baltic power systems. The share of intermittent renewable energy (IRE) in Swedish power system is increasing and this is expected to continue in the next decades. The share of wind power has rapidly increased from less than 1% in 2005 to more than 10% of the total generation in 2015. Even though solar power generation is currently still very low in Sweden, the Swedish Energy Agency has estimated that solar power can cover up to 10% of the electricity demand in 2040. With an increasing share of intermittent renewable energy and the potential of a nuclear phase out, the prices on the electricity spot market are likely to change in the future. In this thesis, statistical approaches are used to find the correlations of the existing market prices to several physical parameters such as temperature, hydro reservoir level, nuclear power generation, IRE, etc., and these are used to construct the proposed market model and to simulate the future scenarios. The results show that there is a strong dependency of the system price on the hydro reservoir level, as well as firm correlations between the system price with nuclear generation, temperature, electricity consumption and IRE. Using the model, it is possible to show that the substitution of nuclear power generation with realistic shares of wind and solar power will not lead to a fundamental change in the market. However, it will be a different case if the solar power share is higher. High solar penetration in the market makes the system prices much more dynamic both on an hourly and a seasonal basis