Study on feasibility of small-scale pumped hydro storage- A case study in Sweden
(2023) MVKM05 20231Department of Energy Sciences
- Abstract
- The European union has been aggressively pushing forward with policies favoring renewable sources of energy. As a result, the share of intermittent renewables in the European power grid is rising and is expected to grow even more in the coming decade.
The Swedish energy agency also forecast huge growth in wind power. This creates a parallel growing demand for electricity storage solutions for both the short and long term. Pumped hydro currently tops the chart for installed electricity storage, and it is the most mature technology available in the market. But, due to site limitations the growth of PHS has been slowed down, basically stopped in case of Sweden. Recently, there has been development of new technologies for modular small scale... (More) - The European union has been aggressively pushing forward with policies favoring renewable sources of energy. As a result, the share of intermittent renewables in the European power grid is rising and is expected to grow even more in the coming decade.
The Swedish energy agency also forecast huge growth in wind power. This creates a parallel growing demand for electricity storage solutions for both the short and long term. Pumped hydro currently tops the chart for installed electricity storage, and it is the most mature technology available in the market. But, due to site limitations the growth of PHS has been slowed down, basically stopped in case of Sweden. Recently, there has been development of new technologies for modular small scale pumped hydro that provide more flexibility with location. This thesis studies a case for feasibility of smaller pumped hydro in Sweden through integration of new technologies and analyzes its business case with respect to future market. The investment cost is broken down, for understanding the cost drivers, which shows that electromechanical equipment dominates the investment expenditure. The potential business case using two new technologies, that is floating machine platform and submersible pump-turbine is explored. The sensitivity analysis on different cost components, as well as the study of different revenue streams, hints that under the present market conditions the investment is uncertain without some subsidies. Nevertheless, some improvements on the operating strategy and integration with different RS can increase the case for profitability. (Less) - Popular Abstract
- The European power grid is ongoing rapid transition towards renewable sources for power generation. With the ambitious plan of becoming the first carbon neutral continent, European countries are massively investing in clean energy infrastructures. The European union (EU)’s policies are also focusing on increasing wind, solar and other green energy sources for cutting carbon emissions by 55 % by 2030. As a result, the reports from think tank EMBER states that Europe generated a combined total of 25 % electricity from wind and solar which was greater than natural gas as well as coal. This trend is expected to rise every year as the new installations of PV and wind farms are added every year. However, the increasing penetration of... (More)
- The European power grid is ongoing rapid transition towards renewable sources for power generation. With the ambitious plan of becoming the first carbon neutral continent, European countries are massively investing in clean energy infrastructures. The European union (EU)’s policies are also focusing on increasing wind, solar and other green energy sources for cutting carbon emissions by 55 % by 2030. As a result, the reports from think tank EMBER states that Europe generated a combined total of 25 % electricity from wind and solar which was greater than natural gas as well as coal. This trend is expected to rise every year as the new installations of PV and wind farms are added every year. However, the increasing penetration of intermittent sources demands more power storage capability for matching production with consumption and achieving grid stability.
Currently, Pumped Hydro Storage (PHS) is the most dominant power storage solution in the world, it is a proven and robust solution present in the market. However, the construction of PHS is limited by the location, as it requires sufficient head difference, installed capacity as well as favorable site condition for economic viability. This limitation is addressed by different methods like using the existing natural reservoirs or old abandoned mines, new technologies in turbines and pilot projects with modular designs. Through the study of available literature, the new approach of pumped hydro and different pilot projects around the world was first studied in this research. This thesis focuses on the economic feasibility of small scale PHS in the future, using modern approaches and the market forecast.
The capacity of a potential project was devised from the complied list of selected locations in Sweden. The investment cost of this project was estimated using the Capex of three sample PHS projects. The different cost elements on the capital investment were studied through stack chart and the possibility to decrease this cost using new approaches and technologies were analyzed. Likewise, the probable Opex for the project was also estimated through literature studies. In the same way, the income the project can generate by taking part in arbitrage and ancillary market was evaluated.
With the aim of understanding the market’s impact upon the project, the relation between day ahead electricity prices and project profitability was probed. To optimize the profit, different algorithms were formulated for finding the right strategy for arbitrage trading. The project’s earnings were scrutinized with historical and forecasted price data to select a realistic market scenario; 20XY for base case. A 10 % revenue was added to income from trading energy in price difference between weekends and weekdays. Simultaneously, the income from ancillary services were calculated using a flat specific cost of 50,000 €/MW which was obtained from literature sources. These all-revenue streams were considered income for the project.
Lastly, a business case was developed keying in capital and operation expenses as well as income revenue from inter-day, intraday arbitrage, and ancillary services. The business case was examined by applying sensitivity analysis to expenses and income. This base case analysis showed that the project is capital intensive and considering 20XY market the payback is 26 years. However, a decrease of 20 % in capital investment can improve the business case with 19 years payback and a 40 % decrease can bring it down to 13 years thereby making the project very appealing. Consequently, the increase in arbitrage revenue by 20 % and 50 % has considerable impact on the return of investment with payback of 18 years and 12 years respectively. But the change in Opex and ancillary prices does not have a larger impact on payback in this analysis. Hence, decrease in the capital cost through use of new technologies makes the business case possible, subsequently improvement in project income using better trading strategies also makes the project lucrative. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9133413
- author
- Niroula, Prashant LU
- supervisor
- organization
- course
- MVKM05 20231
- year
- 2023
- type
- H2 - Master's Degree (Two Years)
- subject
- keywords
- energy storage, pumped hydropower, electricity market, investment, new technologies, feasibility
- report number
- LUTMDN/TMHP-23/5521-SE
- ISSN
- 0282-1990
- language
- English
- id
- 9133413
- date added to LUP
- 2023-08-14 14:38:09
- date last changed
- 2023-08-14 14:38:09
@misc{9133413,
abstract = {{The European union has been aggressively pushing forward with policies favoring renewable sources of energy. As a result, the share of intermittent renewables in the European power grid is rising and is expected to grow even more in the coming decade.
The Swedish energy agency also forecast huge growth in wind power. This creates a parallel growing demand for electricity storage solutions for both the short and long term. Pumped hydro currently tops the chart for installed electricity storage, and it is the most mature technology available in the market. But, due to site limitations the growth of PHS has been slowed down, basically stopped in case of Sweden. Recently, there has been development of new technologies for modular small scale pumped hydro that provide more flexibility with location. This thesis studies a case for feasibility of smaller pumped hydro in Sweden through integration of new technologies and analyzes its business case with respect to future market. The investment cost is broken down, for understanding the cost drivers, which shows that electromechanical equipment dominates the investment expenditure. The potential business case using two new technologies, that is floating machine platform and submersible pump-turbine is explored. The sensitivity analysis on different cost components, as well as the study of different revenue streams, hints that under the present market conditions the investment is uncertain without some subsidies. Nevertheless, some improvements on the operating strategy and integration with different RS can increase the case for profitability.}},
author = {{Niroula, Prashant}},
issn = {{0282-1990}},
language = {{eng}},
note = {{Student Paper}},
title = {{Study on feasibility of small-scale pumped hydro storage- A case study in Sweden}},
year = {{2023}},
}