Future Requirements for the Economic Optimization of Pumped-Storage Power Plants

  Residual load patters 2010 and 2030 (Source: FCN/A. Vieten; FCN Bachelor Thesis)

The increased use of renewable energy sources for power generation implies marked changes in the mix of future power generation portfolios also in Germany. As a consequence of the increasing decoupling between electricity production and consumption over time and space, it can be foreseen that the flexibility requirements for controllable and “reserveable” production and storage units will rise. Likewise, on the electricity markets the daily and seasonal electricity price curves in the spot and reserve energy markets can be expected to change accordingly. In this project, we investigate the future requirements for pumped hydro storage power plants given the changing framework conditions, and in particular their cost effectiveness. We compile and contrast alternative scenarios for the future composition of the power generation portfolios in Germany, taking into account recent developments in energy policy and regulation.

Based on scenario comparison, we determine the most likely scenarios from today’s perspective and show the changes in the level and volatility of the prices in the spot and reserve power markets. We then determine a daily price curve for each market that reflects the future portfolio structure. Subsequently, based on the derived daily price curves, we first discuss qualitatively the various requirements for the economic optimization of pumped-storage hydro power plants. Next, by means of the simulation program POT (of RWE), we determine the basic design parameters (e.g. storage volume, installed capacity, extended water volume) and operating characteristics (e.g. operating hours, load factor) for a specific real-world power plant project where the goal is profit maximization.

On the basis of the future daily price curve and by using the developed simulation model for the case of the power plant project, we perform an investigation of the consequences on the total revenues and the partial revenues from producing (by pumping) and holding reserve power. Furthermore, the influence of a changed revenue structure on the profitability of the pumped storage hydro project is estimated. Finally, we undertake a sensitivity analysis for determining the influences of changes in both technical and economic parameters on the economic viability of the pump storage facility.