WIP-Renewable Energies, Sylvensteinstr. 2, D-81369 München, Germany. Tel: +49-89-720 12 32 1. INTRODUCTION There are extensive plans for realising the potential of wind power in the Nordic countries. The government in Norway recently set a target of 3 TWh within 2010 [1]. In Sweden, the wind power production will probably yield 4 TWh in 2010 [2], and in Denmark 17 TWh in 2030. In Fin- land the target is 1 TWh production from wind power in 2010 [3]. In the Nordic countries, electricity is traded between the countries in an open, liberalised, joint market. Thus sys- tem integration of wind energy not only influence domestic energy production, it influences the whole market area. However, energy and environmental policies are usually made on national level. In the Nordic countries, the electricity system is charac- terised by its large share of hydropower, especially in Nor- way and Sweden. The large variations in hydro inflow are compensated with large storage capacities, giving a large flexibility in hydropower scheduling. The purpose of this paper is to explore the changes imposed by expansion of wind energy in the Nordic market area. Wind power influence area prices which in turn influ- ence production scheduling, and thereby total CO2-emis- sions for each of the Nordic countries uncorrelated with the location of new wind energy. The simulations are carried out using the EMPS model, a stochastic model for long- term optimisation and simulation of hydro-thermal system operation. 2. THE EMPS MODEL The EMPS model (EFI’s Multi-area Power-Market Simulator) was originally developed for hydro scheduling purposes [6]. After deregulation, it has also served as a tool for price forecasting. In brief, the model optimises the total electricity production for a set of interconnected areas, including several types of electricity production. The EMPS model has two main parts. In the strategy part, the so-called water values of the water reservoirs are calculated using a SDP (stochastic dynamic programming) algorithm on aggregated reservoir representations of each area. The water values are estimates of the future value of water in the reservoir for given reservoir levels. They are functions of expected future inflow and alternative production costs (e.g. from thermal power production), and in the EMPS model they are treated as the marginal cost of hydro power. The calculated water values are used in the simulation part, where the optimal hydropower schedule with respect to maximised expected profit for each area is determined. The corresponding market prices for each area are also cal- culated. A more detailed description of the EMPS model is given in [6][7]. 3. WIND POWER IN THE EMPS MODEL 3.1 Weekly wind power production data Figure 1 The EMPS model of interconnected areas with capacity constraints that limits exchange between areas. Location of the seven selected met stations for wind energy modelling are also indicated in red. Helnes Bodø Ørland Valassaaret Visby Barkåkra Säve Risø System benefits of coordinating wind power and hydropower in a deregulated market ABSTRACT: New additions of wind energy in the Nordic electricity market has been studied using the EMPS model. A scenario for year 2010 with CO2-tax and a total of 16 TWh of wind energy according to national targets have been included. The study focuses on the effect of changes in production scheduling imposed by new additions of wind energy under operation of a deregulated market. As a result, the import/export balance between the countries change in favor of exports to Finland and Germany. CO2-reductions caused by wind energy is estimated to be 540 tC/GWh of wind energy generated for the 2010 scenario. The main CO2-reductions take place in Germany and Finland as the result of wind energy expansion in Norway, Sweden and Denmark. The energy value of wind power of the Nordic hydro-thermal deregulated market is estimated to be 7% higher than the average spot price in the 2010 scenario. Keywords: Markets - 1;Power Plant Scheduling - 2; Environmental Aspects - 3 Klaus-Ole Vogstad Dep of Electrical Eng, NTNU SEFAS/NOR-7465 Trondheim phone: +47 73597644 fax: +47 73597250 klausv@stud.ntnu.no www.stud.ntnu.no/~klausv Hannele Holttinen VTT Energy PB. 1606/FIN-02044 VTT phone:+358-9-4561 fax: +358-9-456 6538 hannele.holttinen@vtt.fi Audun Botterud Dep of Electrical Eng. NTNU SEFAS/NOR-7465 Trondheim phone: +47 73597165 fax: +47 73597250 audun.botterud@energy.sin- tef.no John O.G. Tande Sintef Energy SEFAS/NOR-7465 Trondheim phone: +47 73597494 fax: +47 73597250 john.tande@energy.sintef.no