Different Optimisation Perspectives in the Åland Energy Market due to the Increase of Renewable Energies Master Thesis | Julia Marie Leichthammer, B.Sc. | 1635597 | Business Engineering with the technical field of studies Electrical Engineering and Information Technology | Specifications in Finance & Project Management as well as Electrical Power Engineering | Submission date: 1. November 2016 TU Darmstadt | Department of Law and Economics | Institute of Corporate Finance | Prof. Dr. Dirk Schiereck TU Darmstadt | Department of Electrical Engineering and Information Technology | Institute of Electrical Power Supply with Integration of Renewable Energies | Prof. Dr.-Ing. Jutta Hanson | Tim Plößer, M.Sc. ABB Oy | Strömbergintie 1B, 00381 Helsinki, Finland | Discrete Automation and Motion Division | Business Unit Motors and Generators | Teijo Kärnä List of Contents List of Tables ...................................................................................................................................... III List of Figures ..................................................................................................................................... IV Personal Declaration........................................................................................................................... VI List of Abbreviations .......................................................................................................................... VII 1 Abstract ......................................................................................................................................... 1 2 Introduction .................................................................................................................................. 3 2.1 Facts and Data about the Market in Åland with a Focus on the Energy Sector ........................ 3 2.2 Definition of the Term Smart Grid .......................................................................................... 7 2.3 Considerations for a Smart Grid in Åland ............................................................................... 9 2.4 Directly and Indirectly Involved Parties of the Åland Smart Energy Platform ........................ 11 2.4.1 Åland Government ........................................................................................................ 11 2.4.2 ÅTEC ............................................................................................................................. 12 2.4.3 TSO Kraftnät Åland AB .................................................................................................. 12 2.4.4 DSO Mariehamns Elnät AB ............................................................................................ 13 2.4.5 DSO Åland Elandelslag (ÅEA) ....................................................................................... 13 2.4.6 Energy Producer Mariehamns Energi AB ....................................................................... 13 2.4.7 Electricity Producer Allwinds AB ................................................................................... 13 2.4.8 Finnish TSO Fingrid Oy ................................................................................................. 14 2.4.9 Finnish DSO Caruna Oy................................................................................................. 14 2.4.10 Swedish DSO Vattenfall AB ........................................................................................... 14 2.4.11 Swedish TSO Svenska Kraftnät AB ................................................................................ 14 2.4.12 ABB Oy ......................................................................................................................... 15 3 Technical Analysis of the Åland Grid and Identifying Future Challenges ...................................... 16 3.1 Current Situation in Åland and Developments ...................................................................... 18 3.1.1 Generation .................................................................................................................... 18 3.1.1.1 Wind Power in Åland ............................................................................................. 18 3.1.1.2 Biomass Power in Åland ......................................................................................... 22 3.1.1.3 Solar Power in Åland .............................................................................................. 23 3.1.1.4 Fossil Power in Åland ............................................................................................. 23 3.1.2 Transmission ................................................................................................................. 23 3.1.3 Distribution ................................................................................................................... 24 3.2 Load Curves and Balance Challenges .................................................................................... 26 3.3 Metering .............................................................................................................................. 30 4 Economic Analysis of the Åland Energy Market and Market Opportunities................................... 33 4.1 Networks and Authorities ..................................................................................................... 33 4.1.1 Nordel ........................................................................................................................... 33 Julia Marie Leichthammer | Master Thesis | List of Contents I 4.1.2 European Network of Transmission System Operators for Electricity (ENTSO-E) ........... 33 4.1.3 NordREG ....................................................................................................................... 36 4.1.4 Nordic Council .............................................................................................................. 37 4.1.5 The Åland Energy Authority .......................................................................................... 38 4.2 The Legal Framework and the Political Agenda .................................................................... 38 4.2.1 Åland Electricity Laws ................................................................................................... 38 4.2.2 Finnish Energy and Climate Roadmap 2050 .................................................................. 39 4.2.3 Nordic Grid Code .......................................................................................................... 41 4.2.4 Network Access Conditions for Cross-Border Exchanges ................................................ 42 4.2.5 Network Code on Electricity Balancing .......................................................................... 43 4.2.6 Network Code on Demand Connection .......................................................................... 43 4.3 Financing ............................................................................................................................. 43 4.3.1 Internal Equity Financing .............................................................................................. 44 4.3.2 External Equity Financing.............................................................................................. 44 4.3.3 Internal Debt Financing ................................................................................................. 44 4.3.4 External Debt Financing ................................................................................................ 45 4.3.5 Project Finance .............................................................................................................. 45 4.3.6 Mankala Company ........................................................................................................ 45 4.3.7 GO2 ............................................................................................................................... 46 4.4 Energy Exchange at Nord Pool ............................................................................................. 47 4.5 Different Tariff Models ......................................................................................................... 57 4.6 Collecting Data ..................................................................................................................... 58 5 Grid Modernisation Needs and Recommendations for a Åland Smart Grid ................................... 60 5.1 Smart Meter and Smart Home .............................................................................................. 60 5.2 Future Generation and Reserve Power .................................................................................. 61 5.3 Updating Old Wind Turbines ................................................................................................ 64 5.4 Combined-Heat-Power ......................................................................................................... 64 5.5 Energy Storage ..................................................................................................................... 65 5.6 E-Vehicles and Solar Panels .................................................................................................. 66 5.7 Virtual Power Plant .............................................................................................................. 67 6 Proposal for a New Market Model for Åland ...............................................................................