On the wholesale electricity markets, Swiss hydropower is mainly a price-taker. In the last decade, market prices in Switzerland decreased, which lead to drops in market revenues. The energy economics group of the Paul Scherrer Institute evaluated the possible prospects of market revenues under future price scenarios to assess possible profitability ranges of Swiss hydropower.
The operation of Swiss stored hydropower in a market environment is a complex task: The dispatch, i.e. the decision when to generate power and when to pump-up water (in case of pumped-storage), has to be optimized against the market prices under many side constraints. The market prices change on an hourly (or even sub-hourly) time scale, and the storage level is also changing by natural water flows. Moreover, stored hydropower plants in Switzerland serve as seasonal long-term storage. The decision to dispatch water in the next hour should optimally be made considering the opportunity to dispatch alternatively in later hours and taking into account the available water and likely future price ranges.
In our project in the SCCER-SoE, the purpose of price-driven dispatch optimization is to determine possible ranges of future market revenues by using accessible, well-documented modelling. The hourly dispatch is optimized up to a time horizon of a year, taking into account both hourly and seasonal price variations. We base the stochastic modelling on the statistical properties of electricity prices and give examples of a pumped-storage plant, the stored hydropower in the context of EU’s price determinants, and spinning reserve provision.