Investment Analysis with the EMPS Model with Emphasis on Central Norway

Abstract

Central Norway has had a significant growth in power consumption over the last few years, and demand is expected to rise. Due to lack of investment in sufficient generation and transmission capacity, Central Norway is expected to have a significant power deficit in an average year and severe deficits in dry years. This thesis investigates the power situation in Central Norway by using the EMPS model developed at SINTEF Energy Research combined with newly developed investment functionality. The thesis has studied the EMPS model and developed new functionality for the investment model in order to do more precise investment analyses. Simulations on optimal investments in different cases concerning increased load and subsidies on wind power investments have been done as well. The simulations show that the power situation Central Norway is close to critical and that investments must be executed to avoid high risk of rationing in a future situation with higher demand. The investment analysis based on the present state show that the proposed transmission investments on Nea--Järpströmmen and Ørskog--Fardal are sensible and very useful for the power situation in Central Norway. Simulations show that subsidies to encourage wind power development might cause more uncertain and variable prices due to lower price incentives to build new transmission capacity. Simulations also show that large wind power investments will have a substantial impact on how hydro power is utilized in Norway. The investment functionality has shown a good capability to obtain sensible solutions that give less price variation throughout the system and reasonable price distributions as long as the investments are small enough to not have substantial impact on hydro power utilization.