Artjoms Obushevs 1, Mario Turcik 2, Irina Oleinikova 3, 1-3 Institute of Physical Energetics, Gatis Junghans, JSC Latvenergo

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1 Market Based Analysis of ower System Interonnetions Artjoms Obushevs 1, Mario Turik 2, Irina Oleinikova 3, 1-3 Institute of hysial Energetis, Gatis Junghans, JSC Latvenergo Abstrat Analysis in this Artile is foused on usage of transmission grid under liberalized market with impliit transmission apaity alloation method, e.g. Nordi market. Attention is paid on fundamental hanges in transmission utilization and its eonomial effetive operation. For interonnetion and power flow analysis and losses alulation model of Nordi grid was developed and transmission losses alulation method was reated. Given approah will improve eonomial effiieny of system operation in eletriity market onditions. Keywords Eletriity market, HVDC tehnology, power flow. I. INTRODUCTION ower system analysis omprises of analyzing of internal transmission system and ross-border and ross-area interonnetions and its transmission apability as well as deployment and strutures of power generating units. Utilization of power system generation and transmission apaities is performed by market needs and partly for maintaining of system stability and seurity represented by transmission reliability margin and reserves in power generation. ower flows along inter-area onnetions based on market priniples are driven by prie differenes between them. Effetiveness and optimal performane of System operation governed by market priniples should take into aount the merits of eletriity transmission between Areas in situations when differene of pries in omparison to transmission osts is not eonomially effetive. Losses optimization management determines optimal utilization of interonnetion under onditions of eletriity market and its trading rules. II. BALTIC AND NORDIC OWER SYSTEM ANALYSIS Inter-States transmission lines and its apaities were predominantly onstruted to maintain stability and inrease seurity of interonneted power systems. However, new wellfuntioning eletriity market with ompetitive environment onsiderably depends on possibilities transmit power between power produers and onsumers. Therefore, liberalization of eletriity markets has inreased importane of transmission apaity suffiieny on internal transmission lines as well as ross-border onnetions due the growth of trades and exhanges between ountries. Benefits of involved ountries flows from ross-border trade and transfer of energy aross ountry what enhane utilization of transmission system and in many ases requires strengthening its apability. ower systems of Balti States (Estonia-Latvia-Lithuania) working synhronously with power systems of Belarus and Russia. Utilization of transmission ross-border lines apaity strongly depends on internal transmission apability of respetive Country. Due that reasons many projets for internal grids reinforement were performed. Transmission grids operates at the following AC voltage levels: Estonia: 110/330 kv; Latvia: 110/330 kv; Lithuania: 110/330/750 kv. ower prodution in Balti is entralized into several major power plants. Estonia predominantly generates eletriity by oil shale-fired thermal power plants and partly by ombined heat and power tehnology. Latvia produing eletriity mostly by ombined heat and power plants and hydro power plants while power prodution in Lithuania is based on hydro, thermal and ombined heat and power units. Installed power generation apaity in Balti by energy soure is shown on Fig. 1 Fig. 1. Installed apaity by energy soure in Balti 2010 Diversity of power prodution in the Nordi leads to efforts about reinforement on internal ross-setion onnetion as well as about ommon market establishment. Common gain is inreasing seurity and lower osts. In Norway is power generating based mostly on hydro resoures. Sweden power prodution uses predominantly hydro and nulear power, Finland used a mix of hydro, thermal power and nulear. Denmark s energy supply was based almost entirely on thermal power with inreasing of proportion wind. See Fig. 2. Fig. 2. Installed apaity by energy soure of Nordel

2 Nordi grid operates at the following AC voltage levels: Denmark: 132/150/220/400 kv; Finland: 110/220/400 kv; Norway: 300/420 kv (and 132 kv northern Norway); Sweden: 220/400 kv; The HVDC links between subsystems at kv. Cross-border interonnetions also onstitute numbers of lines on lower voltages. The delivery apaity of the system as a whole is higher than the sum of the individual delivery apaities of the subsystems [1]. As a result of the expansion of transmission apaity between the subsystems, the interonneted Nordi eletri power system operates inreasingly as a single entity. III. HVDC INTERCONNECTIONS A. HVDC submarine able Fenno-Skan Submarine HVDC able ommissioned in 1989 whih reinfored oupling of power systems of Finland and Sweden. Cable length is 200km. Currently owned by Fingrid (Finland) and Svenska Kraftnät (Sweden). Link is used for power exhange in both diretions. Rated voltage 400 kv, presently operates as monopolar (planed bipolar extension). See Fig. 3. Transmission apaity is temperature-dependent, normally at 550 MW with short overload possibility at the 600 MW. Fig. 3. rinipal Fenno-Skan onfiguration apaity is obtained as total transmission apaity minus determined margin for regulation purposes. As a starting point for trading apaity distribution between northern AC lines and Fenno-Skan is used basi distribution with rules in ompliane with Nordi grid operation ode. Elbas (Intraday trading of Nord ool power exhange) and supportive power trading aross the border are not handled in basi distribution. During periods when a disturbane in power system ourred loss minimization is not employed. arties involved in ooperation do not pay any ompensation for loss minimization benefit, only non-notified balane power is finanially settled [1]. In period is planned extension of Fenno-Skan with seond pole (Fenno-Skan 2) due the inreases in generation apaities, above all, integration of wind park near Gävle and uprates in nulear power plant Forsmark 3. Changes are also onerned reinforement 400 kv AC northern lines and modifiations of substations [2]. B. HVDC submarine able Estlink I Efforts about inreasing of HVDC interonnetion apaities between Nordel and rest of ontinental Europe are primarily based on market interests as well as better utilization of hydroeletri power generation deployed in Nordel and predominant thermal power generation in Continent. These interests are strongly powered also by European Commission with idea to establish ommon EU energy market. Estlink, submarine HVDC able linked up subsystems of Finland (Espoo substation - AC 400 kv) and Estonia (Harku substation - AC 330 kv). Link with total length 210 (2 times 105) km was ommissioned in Operational voltage level of bipolar onstrution is +/- 150 kv. See Fig. 4. Main assets of interonnetion are redution of transmission distanes between south-western Finland and east entral Sweden, whih represents areas with high onentration of onsumption and generating power. Interonnetion also provides possibility for power flow redistribution between 400 kv AC lines on north and Fenno-Skan (middle). Suh operation brings total system losses redution by up to 40 MW. Furthermore, Fenno-Skan has also been provided with damping ontrol regulators and emergeny power ontrol features, whih stabilize the power systems in suh a way that the power transfer apability between northern and entral Sweden an be inreased by 250 MW and in same amount also inreased apability of 400 kv northern AC lines between Sweden and Finland. Operation and apaity redistribution Monitoring, operation and ontrol onerning 400 kv AC links and Fenno-Skan in Sweden is arried out by Grid Supervisor at Network Control of SvK in Raksta and in Finland from Operation Centre of Fingrid in Helsinki. Fenno- Skan regulation responsibility alternates between Finnish and Swedish side every half of alendar year. Transmission apaity of all interonnetions is alulated on daily basis by Operation entres in Raksta and Helsinki. Available trading Fig. 4. rinipal Estlink I onfiguration Maximal transmission apaity at the 350 MW with possibility to transmit energy in either diretion is primary meant for market purposes (ommerial operation). Besides, interonnetion improved seurity of supply in Balti that reates potential hannel for purhasing eletriity from Nordi. Constrution of able not indued any grid improvement on Finnish side. Estimated annual import 2,5TWh from Estonia represents approximately 3% of total urrent Finnish onsumption. To evaluate new possible interonnetions was launhed multiregional study between Nordel, Baltso and SE operator (olish TSO) related to tehnial-eonomi impats of new links [3]. C. HVDC submarine able Estlink II Seond interonnetion between Finland and Estonia will have a transmission apaity of 650 megawatts, whih 26

3 inreases the total transmission apaity between the ountries to 1,000 megawatts. The total length of the link is approximately 170 km. The Estlink II onnetion is due to be ready in the beginning of D. HVDC submarine able NordBalt NordBalt (also known as SwedLit) is a planned submarine power able between Klaipeda in Lithuania and Nybro in Sweden. The aim of the projet is to promote trading between Balti and Nordi eletriity markets, as also to inrease the seurity of power supply in both markets. The length of the able will be 450 km and its apaity will be 700 MW. See Fig. 5. Fig. 6. Nord ool Spot Areas Fig. 5. HVDC interonnetions IV. BALTOOL AND NORD OOL SOT Baltool is established in order to foster the reation of harmonized ommon Balti eletriity market integrated with the Nordi market and further - with Central and Eastern European markets as defined in the Balti Energy Market Interonnetion lan [4]. The trade is arried out on a day-ahead basis: all eletriity delivery agreements are arranged day-ahead for eah hour of the following day. resently, Nord ool Spot runs largest international eletriity market on the World. roviding servies for dayahead market (Elspot) and intra-day market (Elbas) spot trading with physial eletriity. As a result of mathing supply and demand bids at the spot market, final spot prie and trading volumes are determined. Due to potential limitations in transmission apaity spot market in Nordi was divided into Nord ool spot bidding areas. See Fig. 6. Exept Denmark and Norway whih are subdivided into several spot prie areas, boundaries are idential with national borders. TSOs alloate available transmission apaity on a base of prodution and onsumption foreast. Subsequently, available apaity is alloated at Nord ool spot market for trading purposes. Alloation of available transmission apaity is done before Nord ool spot priing. The available apaities for transmission are reported to Nord ool pre bidding and are taken into aount when prie alulation is performed. When no ongestion appeared, the pries in different areas are the same (Area prie = System prie). Market splitting is used if there is ongestion. Solving tasks with strutural ongestion is related to grid investments in ase that it is soio-eonomially feasible, otherwise market splitting is utilized, i.e. dividing the market into separate prie areas. Adequate transmission apaity with effetive utilization is therefore one of the basi requirements to ahieve well funtioning and effetive eletriity market. rie differenes between areas after utilization of transmission apaity between them generate an ownerless inome on the spot market, trading flow from the area with a lower prie to the area with a higher prie. In situations when flow goes from high prie area to low prie area (towards low prie area) due to speifi operations or dispath optimization by TSOs, generating of ownerless osts ourred [2]. These ownerless osts and inomes are referred as ongestion rent. Within the Nordi region this inome is alloated to the TSOs as owners of the transmission grid. Calulation of ongestion rent as follows: C, (1) B A A B R where: A - area prie in area A, m.u./mwh; B - area prie in area B, m.u./mwh; A B- planned Elspot flow in speifi hour from area A to area B, MW; C - aggregated ongestion rent m.u. R 27

4 Sharing of ongestion rent between TSOs is based on resemblane to a real power system in Sweden where more Sharing Agreement whih provide two possible sharing generation units are in the north and heavy load entres in the options. First, alulates adequate share (partiipation) of all south. The sheme onsists of 33 buses, 28 synhronous TSOs on Five prioritized projets within Nordel related to generators, 51 branhes, 3 DC lines and a total of 25 loads. Nordi grid development. Seond divide ongestion rent in See Fig. 8. As a starting point the simplified single diagram of two equal shares only between affeted TSOs [1]. Inomes of the CIGRE Nordi32-bus test system [7]. TSOs are ommonly used for redution of tariffs or investments to transmission grid. New Estlink bidding area at Nord ool Spot was launhed on 1 April 2010 and onnets Estonia to Nordi eletriity market. The long term goal is to reate a Balti market onneted to the Nordi market through Nord ool Spot [5]. The Estlink able is operated by ompany AS Nordi Energy Link (NEL). NEL was founded by Balti and Finnish ompanies. These share NEL Company (transmission apaity on Estlink) as follows: Balti ompanies Eesti Energia (39.9%), Latvenergo (25%) and Lietuvos Energija (25%) and Finnish ompanies ohjolan Voima and Helsingin Energia (Finestlink) remaining 10.1%. Shareholders will sell before 2013 entire NEL ompany to TSOs Fingrid (Finland) and Elering (Estonia) [6]. Suitable environment for Estonian market establishment by Nord ool Spot arised after Latvenergo and Eesti Energia offered their shares of Estlink apaity to the Estonian and Finnish transmission system operators Elering and Fingrid. This step ensured suffiient apaity for opening the Estlink bidding area. Available transmission apaity alloated for the Elspotmarket was 252 MW from Finland to Estonia and 262 MW from Estonia to Finland. Sine September 2010 TSOs of Fig. 8. Sheme of Nordi grid Finland and Estonia rented full able apaity from owners and offered for market purposes. After new agreement the Model of Nordi grid was reated in owerworld Simulator available transmission apaity is 350 MW in both diretions. whih is designed to simulate high voltage power system See Fig. 7. operation. Software ontains power flow analysis and losses alulation. Simulation and parameters of grid elements takes into aount urrent state of real power system in Nordi. Fig. 7. Estlink power flow utilization by Elspot, 2010 Inreasing of transmission apaity through Estlink is very positive for the market development in the Balti and Nordi. Adequay apaity is one an important step in markets integration and further on, towards ommon European market with eletriity. A. Fenno-Skan loss minimization and benefits sharing Loss minimization in Finnish and Swedish grids by Fenno- Skan aggregates benefits whih are divided equally between TSOs. Benefits alulation as well as distribution between parties (Fingrid & SvK) is based on following priniples [1]: The overall benefit to the system in partiular hour is defined as the positive differene between the alulated overall loss overheads during basi distribution and during the real referene value. As referene value minimal point is usually used. See Fig. 9. Overall System Benefit Calulation Finnish Grid Benefit Calulation (Fingrid) Swedish Grid Benefit Calulations (SvK) Mutual Settlement (ompensation) V. LOSSES OTIMIZATION MANAGEMENT For the analysis of Fenno-San in the Nordi ountries the modified Nordi32-bus test system is used. Its lose Final Benefits of arties Fig. 9. Fenno-Skan benefit evaluation and distribution 28

5 Estlink power flow, MW Transmission losses, Mw ower Flow, MW rie Differene, EUR/MWh Estlink power flow analysis estimates markets ativity and prie differenes of interonneted areas. Calulations are based on physial power flow through Estlink at hourly basis from 1 April 2010 until 9 April. Figure 10. shows example of prie differenes between Estonia and Finland whih aused a physial power flow through Estlink. In assumed period only flow from Estonia to Finland appeared ower flow diretion (<0 FIN to EE, >0 EE to FIN) Fig. 10. rie differene & Estlink power flow Sientifi Journal of Riga Tehnial University B. Estlink I losses alulation In aordane with priniples of eletriity market, eletriity is purhased from area with lower prie and delivered into area with higher prie utilizing an available transmission apaity. For profit of suh transmission is neessary observe following inequality (show in Fig. 12. and Fig. 13.): rie differene 30 Week (168 hours) Transmitted volume in assumed period represents 2,295 TWh of whih from FI to EE is 0,247 TWh and EE to FI is 2,048 TWh. Calulation of Estlink losses were performed by Estlink Losses Formula. Total alulated losses aused by power flow in both diretions are 113,424 GWh of whih from FI to EE is 12,807 GWh and EE to FI is 100,617 GWh. Value of Ignored transmission losses alulated in ompliane with method below for assumed time period is EUR. This finanial loss is borne by owners of interonnetion, respetively is transferred to the eletriity tariffs and borne by final onsumers. Figure 11 shows one week period Estlink power flow and aused (alulated) power losses. 350 Estlink Total Calulated load losses , (2) where: 1 input power flow into transmission line in speifi hour, MW; 2 power flow in speifi hour at the end of line, MW; 1 lower area pries EUR/MWh; 2 higher area pries EUR/MWh. Taking into aount the losses in the line Δ= 1-2 inequality takes the form: 1 2, (3) ( 2 1) where: 1 variable transmission osts, EUR/MWh; 2 VAR 2 1 prie differene, EUR/MWh. Transmission of power along the line during periods when formula (3) is in fore represents eonomially effetive operation. 0 VAR. (4) In ase that prie differene between Areas is under value of variable transmission osts, with respet of limitation (4), aggregation of ignored transmission osts ourred. Area 1 ( 1 2 ) 1 1 VAR 2 2 Area 2 1 MWh 2 MWh Fig. 12. Example for variable transmission osts alulation Area 1 Low prie zone A2 demand A1 demand 2 1 A1 supply Area 2 High prie zone A2 supply Fig. 11. hysial Estlink power flow & alulated losses Ignored transmission losses alulation method Term Ignored transmission losses represent part of total transmission losses whih are aused in periods (hours) when flow driven by market priniples along lines between Areas in omparison to osts of transmission are not eonomially effetive. Soial gain from transmitted energy is lower then osts of transmission. 0 VAR 2 1 Fig. 13. Demand and supply urves with interonnetion for 2 areas After variable transmission osts VAR of interonnetion were alulated, in ompliane with prie differenes between 29

6 Areas on hourly basis, osts of Ignored transmission losses was obtained as follows: if 0 then C ( ) VAR ignored VAR 2. (5) Considering the onnetion Estlink I the following example for the 6th Deember from 8:00 till 9:00 AM is depited in figure 14. Artjoms Obushevs was born in Riga, Latvia on November 7, He is reeived his BS, MS degree from the Riga Tehnial University, in 2008 and 2010 respetively. Currently he is hd student in RTU. He is researh assistant in the Laboratory of ower System Mathematial Simulation at the Institute of hysial Energetis. His main researh interest is Methods of Mathematial Modeling of Eletrial Networks and Systems. Area , ,79MW 0,88 EU R 2 365MW MWh 17,79 64,98 EUR VAR 3, MWh Cignored VAR 2 834,8281 EUR Area 2 2 = 65,86 Fig. 14. Example for osts of Ignored transmission losses alulation This example shows situation when during one partiular hour was transmitted in ineffiient mode 365 MWh. The transmission, taking into aount alulation of ignored transmission losses aggregates finanial loss 834,83 EUR. VI. CONCLUSIONS Liberalization of eletriity market has bought inreased utilization of interonnetors as the importane of ross-border trade inrease, as well as has hanged harater and main purpose of usage. When defining power flow between different prie areas based on market priniples, TSOs mostly ignore transmission osts that results in ineffiient utilization of transmission grid and therefore auses loss to soiety. Considering transmission losses when alulating area pries and power flow between prie areas seems simple from algorithm point of view. But, it should be further investigated how pratially easy it is to hange urrent praties of alulating area prie and power flows between prie areas by power exhanges to improve eonomial effiieny of system operation. Mario Turik was born in Humenne, Slovakia on July 16, He reeived his Bahelor and Master degree from the Tehnial University of Kosie, in 2008, Currently hd student Tehnial University of Kosie and Assistant in Laboratory of Eletri ower System Simulation at the Institute of hysial Energetis in Riga. His researh interests inlude Methods for Development of ower Systems lanning and Eletriity Market. Irina Oleinikova was born in Riga, Latvia, on September 16, She reeived the BS, E.E., MS and Dr.s.ing. degrees from the Riga Tehnial University, in 1994, 1995, 1997 and 2000 respetively. She is senior researher in the Laboratory of ower Systems Mathematial Modelling at the Institute of hysial Energetis. Her main researh interests inlude Methods for Mathematial Modelling of Eletrial Networks and Systems; Methods for Development of ower systems lanning; Dynami Optimization Methods and Deision Systems. She is author more then 100 papers, inluding 4 books. Gatis Junghans was born in Latvia, He has 10 year professional experiene in power industry. He had worked in power distribution and transmission ompanies and sine 2005 his professional field is power trading. He reeived Dr.s.ing. from the Riga Tehnial University in 2008 and MBA degree from Stokholm Shool of Eonomis in Riga in REFERENCES [1] Nordi Grid Code (Nordi olletion of rules), [Online]. Available: -/planning/070115_entsoe_nordi_nordigridcode.pdf [2] Nord ool Spot Report, TSO Congestion rent, [Online]. Available: [3] Multiregional planning projet Market based analysis of interonnetions between Nordi, Balti and oland areas in 2025, from 10 February 2009, [Online]. Available: ket_based_analysis_final_v2.pdf [4] Final Report of the High Level Group: Balti Energy Market Interonnetion lan, [Online]. Available: [5] Nord ool Spot - Exhange Information, [Online]. Available: ww.nordpoolspot.om/en/market_information/exhange-informatio-n/- No NS--Estonian-market-suessfully-opened-during-easter [6] Nordi Energy Link Balti-Finnish submarine able, Offiial information [Online]. Available: [7] Final report CIGRE TF , Long term dynamis, phase II,, CE/SC 38.WG02, Ref. no 102, Teh. Rep.,