COMPLETED PROJECT
Analyzing southern Norway’s power price sensitivity to increased wind and solar power generation
Changes in Power Market Behaviors
Southern Norway (NO2) has become increasing interconnected to neighboring higher priced areas, such as Great Britain and Germany, contributing to higher observed price levels and increased volatility in the Norwegian price area. Following the gas crisis in 2021 which caused power prices to soar, Europe has installed a staggering amount of renewable capacity, increasing the overall level of intermittent generation and thus increasing power price volatility across Europe. Despite limited new renewable generation sources in NO2 the last couple of years, the price area is greatly influenced by Continental developments. This has created a need to further understand renewable capacity developments going forward both domestically and on the other side of the interconnectors.
Key Value Points:
- Tailormade price forecasts in hourly resolution with our client’s own assumptions, with a 30 weather-year spread to address weather-related risk.
- Sensitivity analysis investigating how exposed NO2 is to increased Continental renewable generation. Simulation results with three different renewable generation targets in TWh for Germany and Great Britain were analyzed.
- Sensitivity analysis investigating the level of renewable generation needed to dampen NO2 power prices. Simulation results for three different renewable generation targets in TWh for NO2 were analyzed.
- Evaluation of profitability of various hydropower producer bidding strategies in the context of increased renewable generation both abroad and within NO2.
How we created value
When using a simulation model like Volt’s hourly model, risk and uncertainty can be evaluated through weather-year spreads (e.g. running 30 different historical weather patterns through the model) and/or sensitivity analyses through changing renewable assumptions.
Volt has assisted one of our clients with evaluating the level of renewable generation required to dampen power prices in Southern Norway back to levels seen before the gas crisis.
Investors looking to Southern Norway can also use Volt’s simulations to evaluate the profitability of their potential investment. In addition, Volt’s simulation results give insight into future consumer costs and how to optimally hedge power consumption, for example for power-intensive industry.
In addition to simulation results and long-term price forecasts covering up to 2050 in hourly resolution, Volt Power Analytics can provide tailormade analyses and hands-on guidance and support on how to navigate the volatility created by renewable generation.
