In Europe, very high concerns regarding political stability and security situation in North African countries exist. Geopolitical risks are often mentioned as a key drawback for the success of RE projects in North Africa which will supply European consumers. Additional costs for back-up capacities in Europe in case of a sudden breakdown of supply from North Africa might lower the benefits from electricity exports. On the other hand, national realization of RE targets by North African countries also has to overcome large barriers and problems. Therefore, geopolitical risks generally are a critical aspect for all renewable energy projects in North Africa although all energy infrastructure projects underlie large external risks during their planning process and operational use. Therefore, this section summarizes current framework conditions and future boundaries for a large-scale integration of renewable energy sources for domestic and export use. Komendantova et al. (2012) identifies three relevant classes of risk: regulatory, political and force majeure risks. This classification is extended to the following risks of future electricity systems with a high share of RES:
1) Regulatory risks: For the construction of new power plants, the regulatory framework has to be clear and stable over a long period to lower investment risks. Higher regulatory risks by uncertain tariffs or uncertain guarantees by national governments increase financing cost for RE projects in North Africa.
For electricity exports, regulatory risks mainly exist regarding the remuneration schemes of exported electricity and the availability of sufficient transmission capacity to Europe after commission of new RE power plants. Responsibilities between North African and European authorities as well as grid operators and utilities are not defined yet.
2) Political risks: Recent political changes in North African countries also influence the success of RE projects as the uncertainty of long-term policy frameworks and security situation has increased.
To classify political risks for electricity exports, (Lacher and Kumetat, 2011) evaluate the political and terroristic threats for an energy infrastructure (power plants and
52 CHAPTER 3. Electricity system of North Africa
transmission lines) by comparing electricity export with the existing natural gas export of Algeria. First of all, the authors distinguish between governmental decisions which could threaten the energy supply and terroristic activity, insurgency and sabotage. They conclude that North African countries have been reliable energy exporters and problems within or between North African countries did not reveal any influence on the export of natural gas in the past. Furthermore, the authors point out, that exporters will lose revenues if they interrupt electricity exports to Europe as the good “renewable electricity” cannot be stored for later use. On the other hand, it is highlighted that wide- spread RE projects are difficult to be protected by security forces. Also, damage of high voltage transmission lines which carries large amount of energy can deeply impact the national and international electricity system.
3) System vulnerability: Grid stability and security of supply increase their significance in scenarios with high RES-E shares in an electricity system as need for operational interventional and short-term (re)-dispatch should be higher. Growth of electricity exchange across different countries leads to higher dependencies of the national electricity systems.
A sudden stop or severe reduction of energy export can affect the electricity system of the importing country dramatically, as reaction speed of customers in importing countries is depending on the time of activating local control and reserve capacities in Europe (Lilliestam and Ellenbeck, 2011). The authors present a scenario analysis of sudden stops of electricity exports from North Africa to Europe. On such occasions, the costs for European countries increase strongly due to the effects on economy and society, but the losses for exporting countries are relatively modest as only revenues of electricity export are affected. This bargaining power of North African countries is important to note for the electricity security in Europe. Nevertheless, large-scale export scenarios might only enhance considerable vulnerability to Europe, if a jointed action of export stop is organized. The rather limited weight of a single country on the power market can hardly destabilize the European power market as exchanges between European electricity markets commonly balance disruption of external supply (Lilliestam and Ellenbeck, 2011).
Recently, it has been reported that in Libya the electrical grid and transformers had been under attack and in Tunisia wind farms had do shut down due to damage during and after the national revolutions in 2011 (Dodd, 2012; Chikhi, 2013). This emphasizes the need for a stable political situation in North Africa which guarantees a secure environment for large RE power plants and new interconnections. However, geopolitical risks are not technology specific if national generation and supply are covered. In case of electricity exports, a further risk dimension for the European electricity market has to be considered. Model results and electricity scenarios, however, should weight the advantages of a large interconnected electricity system with the risks created for the different stakeholders. Implementation of all risk factors into the energy system analysis (optimization model) would strongly increase the model size and model horizon. Therefore, a risk analysis of electricity scenarios is carried out during the interpretation process and transformation on the real system.
CHAPTER 4. Development of the electricity market model RESlion 53
4 Development of the electricity market
model RESlion
For the model based analysis of the long-term development of the electricity systems in North Africa with large-scale integration of renewable energy sources, an optimization model called RESlion5 with a linear programming approach is presented in this chapter. Firstly, the main
model requirements and modeling goals are defined to circumscribe the scope and the limits of the model approach. In this regard, this chapter also is mainly focused on providing the information on modeling approach and underlying assumptions as well as a detailed description of the electricity market model. An important part of the model is the prepossessing of hourly electricity generation profiles of renewable energy sources at different locations. Therefore, the implementation and use of external technical performance tools are described. However, a large part of this chapter represents the detailed description of the RESlion model and its mathematical formulation. Key model elements are the investment decision for new infrastructure projects and the operation of generation capacities, transmission lines and storage systems within an electricity system.
4.1 Model requirements and modeling goals
Before specifying the methodological approach of the electricity market model, technical and economic requirements and modeling goals are conducted from the required aggregation level, available input data, temporal and geographic coverage as well as from technological parameters. Some of these requirements are caused by existing energy market frameworks. But most of them are derived from the research questions regarding optimal technology choice and large-scale integration of renewable energy sources into the electricity system of North Africa.
1) Link between expansion planning and operation: The two problems of long-term expansion planning and the hourly operation (generation dispatch) of power plants by considering the constraints of the transmission grid have to be analyzed to evaluate the long-term development of the electricity systems.
2) Focus on electricity markets: The model is focused on the electricity systems and markets of North African countries and does not analyze other sectors such as the transportation and heating sector. As the heating sector in North Africa is relatively small, private and commercial consumption of energy for heating is mainly based on electricity. Further energy consumption usually takes place in industry (process heat) or transportation sector. Cooling by conventional air-conditioning systems is typically supplied by electricity as well. The transportation sector is excluded as the integration of renewable energy sources and the link to the European energy markets are limited.
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Electric vehicles are not covered as currently this issue is not under research or discussion for the North African market.
3) Interconnections with Europe: The electricity market model should include the electricity demand and supply of the five North African countries (Morocco, Algeria, Tunisia, Libya and Egypt) and their potential interconnections to Southern Europe through the Mediterranean Sea via high voltage cables. Today, only the existing interconnection between Morocco and Spain in the Strait of Gibraltar with a maximum net transfer capacity (NTC) of 1400 MW offers potential for electricity exchange between North Africa and Southern Europe. Due to the strong demand increase in Morocco, this line is used for Moroccan electricity imports from Spain up to 10% of the electricity demand in Morocco today. However, the model will define the European electricity markets of Spain, France, Italy and Greece as demand nodes for electricity export from North Africa to Europe as exporting electricity to Europe seems to be more valuable as vice versa. This is justified by very good resources for renewable energy in terms of solar irradiation and wind (high average wind speeds in some areas) in North Africa. Therefore, electricity exports from North Africa to Europe via transmission lines (HVDC and HVAC) are analyzed. High penetration scenarios with a high share of fluctuating production from renewable energy sources also require electricity flows from North to South, but they will not be analyzed as a detailed implementation of European electricity market with its generation capacities and demand would be necessary.
4) Regional transmission costs and losses: In addition to the need of new international transmission lines, large integration of renewable energy sources in the national electricity systems will overstress the existing HVAC lines between the regions. Distances between preferable sites for renewable energy sources with sufficient resource conditions (including available, flat land) and electricity load centers exceed several hundred kilometers. Consequently new large transmission lines have to connect locations of supply and demand. Therefore, regional grid connections have to be analyzed in order to find an optimized electricity system as trade-off between good site conditions and low costs of electricity transport. Only by considering losses and costs of electricity transport, the model can answer the question on the best portfolio and power plant locations of the electricity sector. Otherwise, the transmission costs are underestimated and grid congestion takes place like in electricity markets with highly concentrated renewable energy generation in a small area (e.g. wind power in Northern Germany). Above-average wind conditions and similar feed-in tariffs for whole Germany have led to a high penetration of wind power plants in this area. However, this area shows lower regional electricity demand. This situation necessitates high investments for electricity transport to demand centers in Central and Southern Germany (50Hertz et al., 2013). Therefore, the electricity market model has to include costs for investment in new transmission lines, variable transmission costs and losses depending on electricity flows and the distance between generation and consumption.
5) Site selection of renewable energy sources: The potential for renewable energy in North Africa is enormous as wide areas of land cannot be used for agriculture or human settlement due to the arid and semi-arid climate conditions in these areas (Trieb et al., 2005). The model should be able to provide information in which sub-national regions power plants have to be constructed. Explicit sites should be implemented and optimally selected by the model optimization which uses site specific generation
CHAPTER 4. Development of the electricity market model RESlion 55
profiles, costs, electricity demand and transmission constraints to other sub-national regions.
6) Implementation of RE specific operation: Technology specific findings might be interesting as PV power plants could also be built in areas with lower (global) solar irradiance in coastal areas. Compared to this, CSP plants usually require a high and stable direct irradiance which is only available in areas far away from the coast to achieve high turbine efficiencies, optimal storage operation and high energy yields. Detailed technology modeling is also compulsive for the RE technologies such as PV, CSP and wind power. It is especially important, to carefully implement the electricity generation from CSP into the electricity market model, as the model should be able to optimally dispatch CSP plants equipped with thermal storage tanks or with the alternative of hybridization with natural gas. As CSP plants are operated similar to conventional power plants, the hourly dispatch and operation mode of CSP plants have to be optimized by the model itself. Generation of PV and wind power is less flexible and can only be reduced (curtailed) by the optimization model.
7) Conventional power plants: Besides RE technologies, the model has to include a wide range of technology options to generate or store electricity. Conventional power plants remain an important part of the electricity system due to the strong increase of electricity demand and as necessary back-up solution during hours of low wind and solar feed-in. Therefore, the model input data should include existing conventional power plants such as coal power plants, steam turbines, open cycle gas turbines based on natural gas or oil (diesel), combined cycle gas turbines as well as the option to invest in new power plants of these technologies. By taking the current situation into account, the model will be able to project a consistent expansion plan until the year 2050. This approach increases the reliability of the prediction as typical structures of the existing system are not neglected by the analysis compared to other model approaches which plan the whole electricity system of year 2050 on a green field (compare Scholz (2012) and Zickfeld et al. (2012)).
8) Energy storages: Storage potentials in form of pumped hydroelectric storage power stations or large hydropower station using large dams are limited in the region. Large storage power plants only exist and are planned in Morocco and Egypt. In long-term scenarios the model should be open to include further storage options such as large centralized or small decentralized batteries. As a modeling approach for demand-side management can be similar to a modeling approach for batteries, potentials for shifting electricity over a few hours per day are also implemented.
9) Adequate time horizons: With numerous operation possibilities due to high variability of weather conditions throughout the regions and the effect of very different generation conditions which might vary within hours, the model has to be based on hourly time steps for the dispatch optimization of all power plants. The time horizon for the dispatch problem is set to one calendar year. For the analysis of the long-term development of the electricity system, it is necessary to model the power plant expansion over 20 to 40 years. Therefore, the model has to use an integrated investment decisions for new power plants and transmission lines, instead of using a myopic approach. This means that investment decisions are based on information of different years which includes future developments for costs, full-load hours or demand. Expansion planning is then tested for certain years by the detailed generation dispatch.
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10) CO2 emission reduction and RE targets: Reduction of CO2 emissions are the major
reason for many countries to formulate binding targets of electricity generation based on renewable energy sources (see National Renewable Energy Action Plan (NREAP) in member states of the European Union). To lower the dependencies from increasing costs for fossil fuels, North African countries have also declared national targets to install power plants of RE generation technologies to be reached by 2020 or 2030. In the model, the shift from conventional to renewable energy is taken into account by defining obligatory shares of RES-E. If long-term national policies are lacking, own targets can be defined by the model user.
By sufficiently including these requirements into the model, the results reflect the current market structures, technology specific electricity generation profiles and important consequences of renewable energy technologies acceptably.