HVDC Loss Factors in the Nordic Power Market

Andrea Tosatto, Spyros Chatzivasileiadis July 2, 2020 Technical University of Denmark (DTU) XXI Power System Computation Conference Zero-price difference between zones

SE1 NO4 Hours of operation with zero-price-difference FI and corresponding losses (€)

SE2 2017 2018 NO3 % LOSSES % LOSSES NO5 FENNOSKAN NO1 ESTLINK KONTISKAN 61% 1.2 M€ 53% 1.5 M€ NO2 SE3 EE STOREBÆLT 73% 0.8 M€ 74% 1.1 M€ SKAGERRAK 47% 3.2 M€ 46% 4.7 M€ KONTISKAN LV SKAGERRAK SE4 ESTLINK 76% 3.1 M€ 95% 6.7 M€ DK1 LT STOREBÆLT FENNOSKAN 99% 3.8 M€ 80% 4.2 M€ DK2 12 M€ 18 M€

Source: https://www.nordpoolgroup.com/

2 July 2020 Andrea Tosatto - HVDC Loss Factors in the Nordic Power Market 2 Introduction of HVDC loss factors

• With the current practice, are losses not Price of Cost of Cost of considered in the market clearing process. electricity = energy + congestion

2 July 2020 Andrea Tosatto - HVDC Loss Factors in the Nordic Power Market 3 Introduction of HVDC loss factors

• With the current practice, are losses not Price of Cost of Cost of considered in the market clearing process. electricity = energy + congestion

2 July 2020 Andrea Tosatto - HVDC Loss Factors in the Nordic Power Market 3 Introduction of HVDC loss factors

• With the current practice, are losses not Price of Cost of Cost of considered in the market clearing process. electricity = energy + congestion

2 July 2020 Andrea Tosatto - HVDC Loss Factors in the Nordic Power Market 3 Introduction of HVDC loss factors

• With the current practice, are losses not Price of Cost of Cost of Cost of considered in the market clearing process. electricity = energy + congestion + losses

• The Nordic TSOs have proposed the introduction of linear HVDC loss factors*.

* Fingrid, Energinet, Statnett, Svenska Kraftnät, Analyses on the effects of implementing implicit grid losses in the Nordic CCR, Tech. Rep., April 2018

2 July 2020 Andrea Tosatto - HVDC Loss Factors in the Nordic Power Market 3 Introduction of HVDC loss factors

• With the current practice, are losses not Price of Cost of Cost of Cost of considered in the market clearing process. electricity = energy + congestion + losses

• The Nordic TSOs have proposed the introduction of linear HVDC loss factors*.

• The introduction of HVDC loss factors creates ~ price differences to cover the cost of losses. 2%

* Fingrid, Energinet, Statnett, Svenska Kraftnät, Analyses on the effects of implementing implicit grid losses in the Nordic CCR, Tech. Rep., April 2018

2 July 2020 Andrea Tosatto - HVDC Loss Factors in the Nordic Power Market 3 Introduction of HVDC loss factors

• With the current practice, are losses not Price of Cost of Cost of Cost of considered in the market clearing process. electricity = energy + congestion + losses

• The Nordic TSOs have proposed the introduction of linear HVDC loss factors*.

• The introduction of HVDC loss factors creates ~ price differences to cover the cost of losses. 2%

* Fingrid, Energinet, Statnett, Svenska Kraftnät, Analyses on the effects of implementing implicit grid losses in the Nordic CCR, Tech. Rep., April 2018

2 July 2020 Andrea Tosatto - HVDC Loss Factors in the Nordic Power Market 3 Introduction of HVDC loss factors

Stage AC losses HVDC losses Current practice TSOs proposal

• TSOs estimate losses • TSOs estimate losses D-2 - • Bilateral agreements

• Losses are calculated D-1 • Price-independent bids in • Price-independent bids in using loss factors the market the market • The ones who create losses pay

• If losses calculated with • Any mismatch is covered • Any mismatch is covered RT loss factors are exact, in the balancing market in the balancing market society pay less

2 July 2020 Andrea Tosatto - HVDC Loss Factors in the Nordic Power Market 4 Nordic test network NO4 SE1

• Test case: FINLAND – 369 nodes, 362 AC and 10 HVDC transmission lines; NO3 – 631 generating units; – Actual wind, solar and load profiles from 2017. SE2 NO1 NO5 SE3 RUSSIA

ESTONIA

NO2

DK2 DK1 LITHUANIA SE4

THE POLAND NETHERLANDS GERMANY

2 July 2020 Andrea Tosatto - HVDC Loss Factors in the Nordic Power Market 5 Nordic test network NO4

SE1 • Test case:

– 369 nodes, 362 AC and 10 HVDC transmission lines; FI

– 631 generating units; NO3 SE2 – Actual wind, solar and load profiles from 2017. RU NO5 NO1 • Nordic market: SE3 EE – Zonal-pricing market; NO2 – Nodes aggregated into bidding zones;

– Actual transfer capacities from NordPool. DK1 DK2 SE4 LT

PL DE NL 2 July 2020 Andrea Tosatto - HVDC Loss Factors in the Nordic Power Market 5 Nordic test network NO4

SE1 • Simulations:

– Focus on intra-Nordic HVDC lines; FI

– Two analyses: NO3 SE2

1. Linear vs. piecewise-linear RU NO5 2. HVDC vs. AC+HVDC NO1

SE3 EE NO2

DK1 DK2 SE4 LT

PL DE NL 2 July 2020 Andrea Tosatto - HVDC Loss Factors in the Nordic Power Market 5 Market clearing algorithm

min cTg g,f • Market clearing algorithm based on Available s.t. G ≤ g ≤ Gഥ Transmission Capacities (ATC) -ATC ≤ f ≤ ATC Id d − Ig g + If f + p∗loss =0

2 July 2020 Andrea Tosatto - HVDC Loss Factors in the Nordic Power Market 6 Market clearing algorithm

min cTg g, f, f±,u,ploss • Market clearing algorithm based on Available s.t. G ≤ g ≤ Gഥ Transmission Capacities ( ) ATC + f = f −f− + • Quadratic loss functions are used to calculate 0 ≤ f ≤ u ATC to be introduced in the flow linear approximations definition − market. 0 ≤ f ≤ (1 − u) ATC u ∈ {0,1} • Utilization of to determine the binary variables + loss ploss = α (f + f−)+ β direction of the flows. definition Id d − Ig g + If f + Dlossploss =0

2 July 2020 Andrea Tosatto - HVDC Loss Factors in the Nordic Power Market 6 Market clearing algorithm

min cTg ± ± loss g, f, fk,uk,p • Market clearing algorithm based on Available s.t. G ≤ g ≤ Gഥ Transmission Capacities ( ) ATC + − f = σk (fk − fk ) • Quadratic loss functions are used to calculate ± ± ത ± ± ± ത (u − u ) Fk−1 ≤ f ≤ (u − u )Fk ∀ k≠K linear approximations to be introduced in the k k+1 k k k+1 flow ± Fത ≤ ± ≤ ± Fത market. definition uK K−1 fK uK K ± ± uk ≥ uk+1 ∀ k≠K • Utilization of binary variables to determine the ± ∈ {0,1} ∀ k≠K direction of the flows. uk loss σ + − p = k αk (fk − fk ) + • Investigation of: + + − − loss + σ β (u − u + u − u ) + – linear and piecewise linear loss factors. definition k≠K k k k+1 k k+1 + ( ++ −) – HVDC and AC loss factors. βK uK uK Id d − Ig g + If f + Dlossploss =0

2 July 2020 Andrea Tosatto - HVDC Loss Factors in the Nordic Power Market 6 Linear vs. Piecewise-linear

NO5 NO1 • Losses are non-linear. SE3 NO2 • Linear loss factors unfairly penalize one HVDC line over the other. SKAGERRAK • What happens if there are several parallel HVDC KONTISKAN paths? – This is the case of Skagerrak, Kontiskan and Storebælt. SE4 DK1 STOREBÆLT DK2

2 July 2020 Andrea Tosatto - HVDC Loss Factors in the Nordic Power Market 7 Linear vs. Piecewise-linear

Linearization Piecewise linearization

Konti-Skan (KS) KS Konti-Skan Skagerrak (SK) Skagerrak Storebælt (SB) Storebælt SK