Flexible Demand and Supply As Enablers of Variable Energy Integration

44 Pages Posted: 11 May 2017 Last revised: 4 Sep 2019

See all articles by Hannu Huuki

Hannu Huuki

University of Oulu - Department of Economics; Government of the Republic of Finland - Finnish Environment Institute

Santtu Karhinen

Government of the Republic of Finland - Finnish Environment Institute

Maria Kopsakangas-Savolainen

Finnish Environment Institute; University of Oulu - Department of Economics; Martti Ahtisaari Institute

Rauli Svento

University of Oulu - Department of Economics

Date Written: May 10, 2017

Abstract

This article analyses the impact of the interplay between the demand response, wind penetration and hydropower in the Nordic power market. We develop a long-term equilibrium model in which the thermal power capacity adjusts to the zero-profit level over varying real-time pricing adoption rates and wind power shares. Our results show that an increased demand response decreases the amount of thermal power capacity and improves the utilization rate of thermal power and the value of wind power. We show a decreasing marginal gain from an increasing demand response adoption with respect to the thermal utilization and wind value factor. However, the demand response itself does not lead to lower CO2 emissions or reduced variation in hydropower generation.

Keywords: Demand response; Hydropower; Wind value; Thermal utilization; Emission reduction

JEL Classification: L94; C61; D22

Suggested Citation

Huuki, Hannu and Karhinen, Santtu and Kopsakangas-Savolainen, Maria and Svento, Rauli, Flexible Demand and Supply As Enablers of Variable Energy Integration (May 10, 2017). Available at SSRN: https://ssrn.com/abstract=2966053 or http://dx.doi.org/10.2139/ssrn.2966053

Hannu Huuki

University of Oulu - Department of Economics ( email )

PO Box 4600
FIN-90014 University of Oulu
Finland

Government of the Republic of Finland - Finnish Environment Institute ( email )

00260 Helsinki
Finland

Santtu Karhinen

Government of the Republic of Finland - Finnish Environment Institute ( email )

00260 Helsinki
Finland

Maria Kopsakangas-Savolainen (Contact Author)

Finnish Environment Institute ( email )

PO Box 413
Oulu, 90014
Finland

University of Oulu - Department of Economics ( email )

PO Box 4600
FIN-90014 University of Oulu
Finland

Martti Ahtisaari Institute ( email )

Oulu
Finland

Rauli Svento

University of Oulu - Department of Economics ( email )

PO Box 4600
FIN-90014 University of Oulu
Finland

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