Modelling the Operation of Short-Term Electricity Market in Russia
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Dmitrii Kuleshov MODELLING THE OPERATION OF SHORT-TERM ELECTRICITY MARKET IN RUSSIA Thesis for the degree of Doctor of Science (Technology) to be presented with due permission for public examination and criticism in the Auditorium 3310 at Lappeenranta University of Technology, Lappeenranta, Finland on the 8th of December 2017, at noon. Acta Universitatis Lappeenrantaensis 776 Supervisor Professor Jarmo Partanen LUT School of Energy Systems Lappeenranta University of Technology Finland Reviewers Professor Pertti Järventausta Laboratory of Electrical Energy Engineering Tampere University of Technology Finland PhD Vadim Borokhov LLC En+development Russia Opponents Professor Pertti Järventausta Laboratory of Electrical Energy Engineering Tampere University of Technology Finland Professor Sergey Smolovik Department of the Power System Design and Development JSC Scientific and Technical Centre of United Power System Russia ISBN 978-952-335-172-1 ISBN 978-952-335-173-8 (PDF) ISSN-L 1456-4491 ISSN 1456-4491 Lappeenrannan teknillinen yliopisto Yliopistopaino 2017 Abstract Dmitrii Kuleshov Modelling the operation of short-term electricity market in Russia Lappeenranta 2017 205 pages Acta Universitatis Lappeenrantaensis 776 Diss. Lappeenranta University of Technology ISBN 978-952-335-172-1, ISBN 978-952-335-173-8 (PDF), ISSN-L 1456-4491, ISSN 1456-4491 Although the wholesale electricity market in Russia has been in operation for more than a decade, its functioning still remains largely unexplored in the western literature. This doctoral dissertation proposes a bottom-up model of the Russian electricity sector that enables the study of the behaviour of short-term electricity market prices and revenues of electric producers in Russia under conditions of limited information about parameters and operational constraints of the actual electricity market. The modelling procedure covers identification of unobserved parameters of the Russian electricity system using available historical market data, modelling of generators’ offers, simulation of unit commitment and day-ahead energy market operation, and conducting a sensitivity analysis of the model results. The use of the developed market model is demonstrated by its application to study the impacts of the real-life market design and regulatory changes on profits of generators obtained from the day-ahead energy market in Russia. Keywords: Russian wholesale electricity market, electricity market model, sensitivity analysis, unit commitment Acknowledgements I would like to express my sincere gratitude to the many people who supported me during my work on this dissertation. I would like to especially thank my supervisor, professor Jarmo Partanen, for his excellent guidance and encouragement at all stages of work. I would also like to thank Dr. Vadim Borokhov for his expert advice and comments made during the process of dissertation preparation. Great thanks to professor Andrey Mityakov from Saint-Petersburg State Polytechnic University for his suggestions and help in developing certain parts of this work. I would like to address a special thanks to Miko Huomo, Valentin Dzhankhotov and Mikko Pääkkönen from GreenEnergy Finland Oy for expressing their interest and providing support for completing of this dissertation research project. My deepest appreciation to my family and my lovely wife Ekaterina. This work would have been impossible without their support. Finally, without making any claim to completeness I would like to thank my friends and colleagues that surrounded me during my studies: Manuel Garcia Perez, Sergey Voronin, Olga Gore, Alexander Smirnov, Luydmila Smirnova, Andrey Maglyas, Polina Belova, Marina Nikolaeva, Egor Nikolaev, Alexander Maximov, Pavel Ponomarev, Maria Polikarpova, Nikita Uzhegov, Maria Pronina, Katteden Kamiev, Julia Alexandrova, Daria Nevstrueva, Evgenia Vasilyeva and Denis Semenov. Dmitrii Kuleshov September 2017 Lappeenranta, Finland Contents Abstract Acknowledgements Contents Nomenclature 11 1 Introduction 13 1.1 Background ............................................................................................. 13 1.2 Fundamental technological characteristics of electricity supply and demand 14 1.3 Scope of the doctoral dissertation ........................................................... 16 1.4 Research objectives ................................................................................. 18 1.5 Research questions and tasks .................................................................. 19 1.6 Summary and contributions ..................................................................... 20 2 Background information about the Russian electricity market 21 2.1 Russian electricity industry ..................................................................... 22 2.1.1 Thermal generation ..................................................................... 22 2.1.2 Hydro generation ......................................................................... 24 2.1.3 Transmission and distribution ..................................................... 25 2.1.4 Electricity consumption .............................................................. 26 2.2 Markets of electric energy ....................................................................... 27 2.2.1 Unit Commitment ....................................................................... 27 2.2.2 Day-ahead energy market ........................................................... 28 2.2.3 Balancing market ........................................................................ 29 2.2.4 Market of ancillary services ........................................................ 30 2.3 Capacity markets ..................................................................................... 30 3 Overview of electricity markets modelling approaches 33 3.1 Classification of models .......................................................................... 34 3.1.1 Equilibrium models ..................................................................... 37 3.1.2 Agent-based simulation models .................................................. 39 3.1.3 Optimization models for electricity markets ............................... 40 3.1.4 Other models ............................................................................... 42 3.1.5 Applicability of the models for analysis of actual electricity market operations .................................................................................... 43 3.2 Research questions related to the modelling of the Russian wholesale energy market ...................................................................................................... 47 3.2.1 Selection of the model type ......................................................... 48 3.2.2 General model structure .............................................................. 49 3.2.3 Data availability .......................................................................... 53 3.2.4 Solution methods ......................................................................... 55 3.3 Modelling procedure ............................................................................... 55 4 Modelling of the wholesale energy market operations in Russia 57 4.1 Introduction ............................................................................................. 57 4.2 Short-term electricity market demand ..................................................... 60 4.3 Assessment of marginal generation costs ................................................ 61 4.4 Modelling of nuclear production ............................................................. 63 4.4.1 Background and objectives ......................................................... 63 4.4.2 Data and methods ........................................................................ 64 4.4.3 WWER-type reactor plants ......................................................... 66 4.4.4 RBMK-type reactor plants .......................................................... 68 4.4.5 Other nuclear plants .................................................................... 70 4.4.6 Validation of the results and conclusions ................................... 71 4.5 Modelling of hydro production ............................................................... 73 4.5.1 Hydro power basics ..................................................................... 73 4.5.2 Overview of hydro production models ....................................... 75 4.5.3 Data ............................................................................................. 76 4.5.4 Description of the modelling methodology ................................ 77 4.5.5 Results ......................................................................................... 79 4.6 Modelling of fossil fuel generation constraints ....................................... 81 4.6.1 Background information ............................................................. 81 4.6.2 Framework for parameter estimation and data ........................... 83 4.6.3 Availability of thermal sources ................................................... 84 4.6.4 Must-run CHP generation ........................................................... 87 4.6.5 Minimum uptime and downtime constraints .............................. 90 4.7 Reserves ................................................................................................... 91 4.8 Modelling of the transmission network ................................................... 94 4.8.1 Role