Norwegian pumped hydro for providing peaking power in a low-carbon European power market – Cost comparison against OCGT and CCGT Magnus Korpås Dept. of Electric Power Engineering Norwegian University of Science and Technology Trondheim, Norway magnus.korpas@ntnu.no Ove Wolfgang Sverre Aam SINTEF Energy Research Trondheim, Norway Abstract— This paper presents an analysis of the cost of providing peak generation from new OCGT, CCGT and Norwegian pumped hydro plants in a European power system with high penetration of wind and solar power. A method for calculation of the Levelized Cost of Peak Generation (LCPG) is proposed, which builds on the well-established metric Levelized Cost of Electricity (LCOE). Results from a case study shows that building new reversible pumping stations between existing reservoirs in the Norwegian hydro system are economical advantageous over new CCGT and OCGT plants in Northern Europe, taking into account additional costs of subsea cables across the North Sea and corresponding reinforcements of the mainland grid. The study also shows the importance of giving interconnectors access to capacity markets across borders to obtain as low cost as possible for firm capacity in a future European system dominated by variable renewable production. Index Terms— Capacity market, LCOE, Thermal power, Peak demand, Pumped hydro. I. INTRODUCTION European climate and energy goals towards 2030 and 2050 imply massive integration of wind power and solar power, which are variable of nature and often difficult to forecast. To be able to operate the European power system in an efficient and secure manner in the future, it is necessary to exploit several means to provide sufficient flexibility in the system. An opportunity that has received increased attention the last years, is to expand the Norwegian hydropower system with new pumping facilities in order to contribute with significant balancing and peak load power in Continental Europe and UK. The aim of this work is to study the costs of expanding Norwegian hydropower system to provide flexibility and peak power in a future European power market with high shares of variable renewable resources. A main question is whether new pumped hydro stations are attractive compared with new OCGT (Open Cycle Gas Turbines) and CCGT (Combined Cycle Gas Turbines), which are two other flexible alternatives with sufficient technological matureness. Chapter II presents the methodology that has been developed for calculating the cost of meeting the peak demand in systems with high shares of renewable energy. The method is a modification of the well-established metric Levelized Cost of Electricity (LCOE) [1]-[4], which is introduced in the start of the section. The case study parameters and input data is given in Chapter III, while Chapter IV shows the results of an analysis where of new pumped hydro is compared with new CCGT and OCGT. II. METHODOLOGY A. Levelized Cost of Electricity (LCOE) The Levelized Cost of Electricity Generation (LCOE) can be expressed as: 0 1 1 (1 ) (1 ) n t t t n t t t I A r LCOE E r − = − = + + = + ∑ ∑ (1) where I0 is the initial investment cost, At is the annual costs in year t, Et is the annual power generation in year t, r is the discount rate and n is the operating lifetime of the power plant. The LCOE as defined here refers to the levelized cost of providing power from a single power plant, without taking into account transmission and distribution. In its general form in (1), Et can change from year to year. This is especially important to consider for PV panels and other technologies that can experience a degradation in performance over its lifetime. For the technologies covered in this work, we assume constant expected annual power generation over the lifetime of the plant: 0 , nr I A LCOE E E δ ⋅ = + (2) The presented work is part of the research project CEDREN- HydroBalance funded by the Norwegian Research Council and industry partners.