Dispatch flexibility describes the ability of some generators, like hydropower plants with large reservoirs, to rapidly alter their output over a short interval. The degree of dispatch flexibility describes the short-term flexibility of the power plant. The use of this flexibility can be triggered by price signals that make it beneficial to increase production in hours with high prices and then regulate down during hours with low prices.
In a recent study, we have sought to examine:
- How flexible the Norwegian hydropower system is in the short term,
- How much flexibility potential is utilised, and
- To the extent that the observed utilisation of short-term flexibility deviates from estimated optimal dispatch, what explains the difference.
Given the technical, regulatory and market-related restrictions facing Norwegian hydropower producers, we do not find strong evidence that Norwegian hydropower producers fail to make use of their available flexibility. Relevant restrictions on available flexibility include plant inflow, flow capacity, reservoir limitations, turbine efficiency, ramp-up limitations, wear and tear costs, start-stop costs, long production stops, minimum discharge and downstream cascade effects.
Furthermore, our analysis shows that Norwegian hydropower producers have a strong focus on dispatch planning and try to optimise their production in light of the spot-market price. These conclusions are supported both by information provided through interviews conducted as part of the work and by comparing observed dispatch patterns with simulated, estimated optimal dispatch patterns.
This comparison shows that at least half of the potential for dispatch flexibility in Norwegian hydropower plants is exploited. Moreover, plants with a high degree of dispatch flexibility capture higher prices in all weeks and years, while other plants realise systematically lower prices. A more detailed analysis of individual cascades indicates that many of the ‘underperforming’ plants are subject to significant regulatory and environmental restrictions that the general model does not capture. Interviews with several hydropower producers and the Norwegian TSO confirm this.
The complete study can be read on the Norwegian Water Resources and Energy Directorate’s (NVE) website (Norwegian, with English Summary).