The Southeast European power system in 2030 - ANALYSIS Flexibility challenges and benefits from regional integration

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The Southeast European power system in 2030 - ANALYSIS Flexibility challenges and benefits from regional integration
The Southeast European
power system in 2030
Flexibility challenges and benefits from regional integration

ANALYSIS

                      Supported by:

                      based on a decision of the German Bundestag
The Southeast Euro-
pean power system
in 2030

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ANALYSIS                                            ACKNOWLEDGMENTS
The Southeast European power system in 2030:        The analysis “The Southeast European power
Flexibility challenges and benefits from regional   system in 2030: Flexibility challenges and ben-
integration                                         efits from regional integration” was performed
                                                    within the projects “South East Europe Energy
STUDY BY                                            Transition Dialogue" and "Western Balkans
REKK Foundation for Regional Policy Cooperation     Energy Transition Dialogue". "South East Europe
in Energy and Infrastructure                        Energy Transition Dialogue" is part of the Euro-
Mányoki út 14. I.em.4/a | 1118 Budapest | Hungary   pean Climate Initiative (EUKI). EUKI is a project
                                                    financing instrument by the German Federal Min-
IN COOPERATION WITH                                 istry for the Environment, Nature Conservation
Energy Economics Group (EEG),                       and Nuclear Safety (BMU). The EUKI competition
Institute of Energy Systems and Electric Drives     for project ideas is implemented by the Deutsche
TU Wien - Technische Universität Wien               Gesellschaft für Internationale Zusammenarbeit
Gusshausstrasse 25/370-3 | 1040 Vienna | Austria    (GIZ) GmbH. It is the overarching goal of the EUKI
                                                    to foster climate cooperation within the Europe-
COMMISSIONED BY                                     an Union (EU) in order to mitigate greenhouse
Agora Energiewende                                  gas emissions. "Western Balkans Energy Transi-
Anna-Louisa-Karsch-Straße 2                         tion Dialogue" is funded by the Austrian Federal
10178 Berlin | Germany                              Ministry for Sustainability and Tourism (BMNT).

PROJECT LEAD                                        The modelling was funded by the European
Christian Redl                                      ­Climate Foundation (ECF).
christian.redl@agora-energiewende.de
                                                    The opinions put forward in this publication are
Sonja Risteska                                      the sole responsibility of the author(s) and do
sonja.risteska@agora-energiewende.de                not necessarily reflect the views of the Federal
                                                    Ministry for the Environment, Nature Conserva-
AUTHORS                                             tion and Nuclear Safety (BMU) and the Austrian
László Szabó, András Mezősi, Enikő Kácsor,          Federal Ministry of Sustainability and Tourism.
Péter Kotek, Adrienn Selei, László Paizs (REKK)
Gustav Resch (TU WIEN)

Proofreading: WordSolid, Berlin                     Please quote as:
Layout: UKEX GRAPHIC                                REKK Foundation (2019): The Southeast European
Cover image: iStock.com/JoKMedia                    power system in 2030: Flexibility challenges and
                                                    benefits from regional integration.
154/03-A-2019/EN                                    Analysis on behalf of Agora Energiewende.
Publication: May 2019 / Version 1.2                 www.agora-energiewende.de
Preface
Dear Reader,                                                    have to cope with this variable generation by becom-
                                                                ing much more flexible. Moreover, in order to ensure
Energy systems in Europe are undergoing a funda-                security of supply at the lowest possible cost, stronger
mental transformation. As fossil fuels are increas-             physical integration of power systems and regional
ingly phased out, renewables and energy efficiency              cooperation will be key.
will become the backbones of the new energy system.
As early as 2030, 55% of the electricity being gener-           To better understand the issues at stake, we have
ated in Europe will come from renewables.                       commissioned experts from REKK to examine poten-
                                                                tial developments up to 2030 in SEE: What kinds
While this transition will help to mitigate global              of flexibility requirements arise from the projected
warming, it also makes economic sense. The cost of              growth of wind and PV? To what extent can further
wind power and solar PV has dropped significantly in            power market integration within SEE and beyond
recent decades, and further cost reductions are antic-          help to meet this challenge? And will power systems
ipated. Power systems in Southeast Europe (SEE),                still possess sufficient reserve margins to guarantee
being largely dependent on lignite-fired electricity,           security of supply in critical situations?
will also undergo dramatic change. By 2030, renewa-             I hope you find this study an inspiring and enjoyable
bles will be responsible for some 50% of power output           read. Your comments are of course welcome.
in SEE, with wind and solar accounting for two-
thirds of this generation.                                      Yours sincerely,

As wind and solar are weather-dependent, their pro-             Patrick Graichen
duction patterns are variable. Power systems will               Executive Director of Agora Energiewende

  Key findings at a glance:

           Renewables will provide 50% of SEE power demand in 2030. The European energy transition is underway. By
           2030, renewables will account for 55% of power generation in Europe, and 50% of power generation in SEE.
    1      Nearly 70% of renewable power in SEE will stem from wind and solar, given the excellent resource potential of
           these renewables in the region.

           Cross-border power system integration will minimise flexibility needs. Wind and solar pose challenges for power
           systems due to their variable generation. But weather patterns differ across countries. For example, wind
           generation can fluctuate from one hour to the next by up to 47% in Romania, whereas the comparable figure
    2      for Europe is just 6%. Moving from national to regional balancing substantially lowers national flexibility needs.
           Increased cross-border interconnections and regional cooperation are thus essential for integrating higher levels
           of wind and PV generation.

           Conventional power plants will need to operate in a flexible manner. For economic reasons, hard coal and lignite
           will provide less than 25% of SEE power demand by 2030. Accordingly, conventional power plants will need to
           flexibly mirror renewables generation: When renewables output is high, conventionals produce less, and when
    3      renewables output is low, fossil power plants increase production. Flexible operations will become an important
           aspect of power plant business models.

           Security of supply in SEE power systems with 50% RES is ensured by a mix of conventional power plants and
           cross-border cooperation. The available reserve capacity margin in SEE will remain above 35% in 2030. More
    4      interconnectors, market integration and regional cooperation will be key factors for maximising national security
           of supply and minimising power system costs. SEE can be an important player in European power markets by
           providing flexibility services to CEE in years of high hydro availability.

                                                                                                                                3
Agora Energiewende | The Southeast European power system in 2030

4
Content

Executive Summary	                                                                     7

    The SEE power system in 2030: Renewables as the main generation source	            7
    Regional integration helps avoid RES curtailment and enables
    geographical smoothing of vRES	                                                   8
    Renewables generation and its consequences for
    conventional power plants	                                                         9
    Security of supply: Sufficient reserve margins in SEE for a RES-E share of 50%	   10
    Security of supply: Peak demand can be met in the winter season	                  12
    Security of supply: Sensitivity of varying weather conditions and
    interconnector capacities	                                                        13
    Conclusions: Pathways for robust RES deployment and security of supply in SEE	    15

Introduction	                                                                         17

The modelling approach	                                                               19

    Supply side representation in the model	                                          20
    Demand-side representation in the model	                                          20
    Transmission grid representation 	                                                21
    Calibration of the model and input data	                                          21
    Yearly electricity mix in SEE	                                                    23

The SEE power system in 2030	                                                         23

    Impact of RES on conventional power plants: Start-ups and utilization rates	      24
    Transmission grid constraints and RES curtailment	                                25
    Security of supply: Available reserve capacities	                                 28
    Security of supply: Assessment of critical weeks	                                 31

Sensitivity analyses:
The impacts of different weather regimes and interconnection levels	                  43

Conclusions: Pathways for robust RES deployment and security of supply	               49

References51

ANNEX53

                                                                                        5
Agora Energiewende | The Southeast European power system in 2030

6
ANALYSIS | The Southeast European power system in 2030

Executive Summary

This report takes a deeper look at the future of re-      The SEE power system in 2030: Renewa-
gional market integration for power systems with          bles as the main generation source
high shares of wind and solar in Southeast Europe
(SEE). Because these technologies vary in output          In view of the recently adopted EU 2030 targets for
depending on the weather, they bring an increased         climate and energy, all European power systems
need for flexibility services in the power system.        are about to embark on a major transition. By 2030,
Further integration of European power markets is a        an average of 57% of electricity in Europe’s power
crucial enabler of flexibility.                           grids will come from renewable energy sources1. For
                                                          Southeast Europe (SEE), this means a RES-E share
This report assesses in detail the following ques-        of 50% in 2030 (see Figure ES 1).2 A factor accelerat-
tions: What kinds of flexibility requirements arise
from the projected growth of wind and PV in SEE? To       1   See Agora Energiewende (2019): European Energy Tran-
what extent can further power market integration              sition 2030: The Big Picture. Ten Priorities for the next
                                                              European Commission to meet the EU’s 2030 targets and
within SEE and beyond help meet those require-
                                                              accelerate towards 2050.
ments? Do power systems possess sufficient reserve
                                                          2   In line with the overall European energy targets, the
margins to guarantee security of supply in critical
                                                              recent SEERMAP project has demonstrated that the
situations?
                                                              deployment of renewable capacity in the EU SEE and
                                                              Western Balkans is not only feasible but also has several
                                                              advantages over fossil fuel-based investment. See http://
                                                              rekk.hu/analysis-details/238/south_east_europe_elec-
                                                              tricity_roadmap_-_seermap for more details.

 Generation mix in SEE in 2030                                                                           Figure ES 1

                                                                                 Nuclear

                                                                                 Coal and lignite

                                                                                 Gas

                                                                                 Hydro

                                                                                 Wind

                                                                                 Biomass

                                                                                 PV

                                                                                 Other RES

 SEERMAP Decarbonization Scenario; REKK (2017)

                                                                                                                       7
Agora Energiewende | The Southeast European power system in 2030

ing this transition is that roughly 50% of the region’s                            Regional integration helps avoid RES
existing coal and lignite generation capacity will                                 curtailment and enables geographical
need replacement by 2030 due to age and noncom-                                    smoothing of vRES
pliance with emission standards.
                                                                                   Based on our modelling, curtailment will not exceed
Solar photovoltaics (PV) and wind power – driven by                                500 GWh a year in 2030,3 and it will remain zero in
significant cost reductions – will contribute to more                              the SEE region. The main reasons for the low level
than half of the RES-E production in Europe in 2030.                               of vRES curtailment are the availability of hydro
For SEE, wind and PV will contribute some 65% to                                   resources in the region that can satisfy flexibility
RES-E generation. Because wind and solar depend                                    needs in the power system, the availability of inter-
on weather, future power systems will have funda-                                  connectors offering flexibility potential through im-
mentally different generation patterns from those                                  ports and exports and a low correlation between RES
observed today, significantly increasing the need for                              feed-in across borders.
flexibility in the non-intermittent part of the power
system. Regional cooperation and cross-border                                      We observe a very different cross-country pattern in
power system integration offer important ways for-                                 wind generation easing vRES system integration. In
ward in meeting future flexibility requirements.

                                                                                   3    This corresponds to 0.014% of European power demand.

        Time series of onshore wind power generation in a simulation for the first week
        of 2030 at different levels of aggregation                                                                              Figure ES 2

                                                     60%
    Actual wind generation/installed capacity [% ]

                                                     50%

                                                     40%

                                                     30%

                                                     20%

                                                     10%

                                                     0%
                                                           1   25   49        73             97             121          145            169
                                                                                   Hours

                                                                         RO            SEE         Europe

        REKK

8
ANALYSIS | The Southeast European power system in 2030

the SEE region, wind speeds show weak correlation,                  one hour to the next is 47%, while the ­European-wide
ranging from 11% to 46%.4 These fairly low correla-                 maximum change is only 6%.
tions suggest that wind generation would not peak at
the same time within the region; rather, it would be
dispersed over time and across the countries in the                 Renewables generation and its
region. It also suggests that the region would follow a             consequences for conventional
different wind generation pattern from northern Eu-                 power plants
ropean countries, which means that wind production
would not peak at the same time in the wider Euro-                  Both in Europe and in the SEE region, the 2030 sce-
pean region (see Figure ES 2).5 For example, in Roma-               nario shows a more flexible utilization of power
nia the maximum change of wind generation from                      plants based on an increase in the number of start-
                                                                    ups per unit. This is a consequence of a lower uti-
                                                                    lization of conventional power plants due to the
4    This confirms earlier research testing the correlation         increased generation of variable RES and the dete-
     of wind power feed-in between the countries of the             riorating economic performance of coal and lignite
     Pentalateral Energy Forum (Austrian, Belgium, France,
                                                                    plants. Climbing fossil-fuel costs, carbon prices and
     Germany, Luxembourg, the Netherlands, Switzerland)
     where correlation coefficients ranged from 24% (Austria        increasing investment costs place fossil-fuel-fired
     and Belgium) to 66% (Luxembourg and Belgiun). For more         plants at the end of the merit order curve, resulting
     details, see Fraunhofer IWES (2015): The European Power        in a lower number of operation hours. This impact is
     System in 2030: Flexibility Challenges and Integration         further amplified by the growing production of ze-
     Benefits. An Analysis with a Focus on the Pentalateral
                                                                    ro-cost PV and wind generation, which on account
     Energy Forum Region. Analysis on behalf of Agora Ener-
     giewende.                                                      of the “merit order effect” will supplant more and
                                                                    more fossil fuel plants from the pool of generators.
5    For example, Grams C. et. al. (2017) find that balancing
     future wind capacity across regions – deploying slightly       Even though the number of start-ups will increase,
     more capacity in the Balkans than at the North Sea, say –      by 2030 the total start-up costs as a share of variable
     would eliminate most wind production output variations,        generation costs will only amount to 1% in both the
     better maintain average generation and increase fleet-         EU and in SEE (see Table ES 1).
     wide minimum output. See Grams et al (2017): Balancing
     Europe’s Wind-Power output through Spatial Deploy-
     ment Informed by Weather Regimes. Nature Climate
     Change.

    Fossil fuel-based dispatchable power plants and the cost of start-ups in 2017 and 2030.                     Table ES 1

                                                             Number of     Total vari-
                                   Number      Number of                                  Total start-up   Start-up costs/
                                                             start-ups     able costs,
                                   of units    start-ups                                  costs, m€        total costs
                                                             per unit      m€

                      2017          2202        14365              6.5        70636            721              1.02%
     Europe
                      2030          1522        13245              8.7        77664           906                1.17%
                      2017            167         441              2.6         4443             24             0.54%
     SEE
                      2030            89          798              9.0         5824             60              1.04%

    REKK

                                                                                                                              9
Agora Energiewende | The Southeast European power system in 2030

  Utilization rates for different power plant technologies, 2017 and 2030.                            Table ES 2

                                                SEE                                     Europe
                                 2017           2030         Change            2017      2030         Change
                   Nuclear       84.8%         85.2%           0.3%            79.2%     81.0%          1.7%
                   Natural gas    7.5%         39.9%          32.4%            27.0%     31.2%          4.1%

     Utilization   Hard coal     20.2%         33.8%          13.5%            36.2%     46.1%          9.9%
     rate          Lignite       77.6%         63.3%         -14.4%            80.4%     68.4%         -12.0%
                   HFO            0.1%           1.3%          1.2%             4.5%      0.9%         -3.7%
                   LFO            0.0%          0.0%           0.0%             7.3%      0.5%         -6.8%

  REKK

At the same time, the utilization rates of the differ-      Security of supply: Sufficient reserve
ent types of power plants will have changed signif-         margins in SEE for a RES-E share of 50%
icantly by 2030, with the utilization of natural gas
plants climbing to 40% from 7.5% in 2017 and the            The amount of available upward reserve capaci-
utilization of hard coal-fired plants growing from          ties in 2030, though lower than in 2017, will not fall
20% to 34% in the SEE region. The utilization of lig-       below 5 GW in 2030 (12% of the regional peak load).
nite-fuelled plants is projected to fall in Europe and      These reserve capacities can step in if demand un-
in the SEE region, down from 81% to around 68%,             expectedly rises in real-time or if generation unex-
due to deteriorating economic performance and re-           pectedly drops in real-time (e.g. due to a power plant
duced operating hours (see Table ES 2).                     outage or lower than forecasted RES generation).
                                                            In the vast majority of hours, upward reserve ca-
The most important change between 2017 and 2030             pacities will not drop below 20 GW in 2030. Gen-
is that more and more power plants will be operated in      eral evaluation criteria indicate that a minimum of
“peak load” mode: natural gas power plants with low         5–10% of consumption is needed for upward reserve
yearly average utilization rates and a high number of       capacity to guarantee security of supply. By these
start-ups (up to 35 times/year). For comparison, the        lights, the SEE region will have a sufficient level of
highest number of modelled start-ups for a given unit       supply security in 2030.
in 2017 was less than 20 in SEE. By 2030 more than
half of the gas-fired units will actively participate
in the intraday and balancing markets. The utiliza-
tion structure of coal-, lignite- and HFO-LFO-fuelled
plants will change similarly by 2030 – increasingly
operating in a “flexibility services mode”. This con-
firms their changing role and utilisation pattern in
the future electricity system: they will provide more
system balancing and flexibility services and receive
more of their income from short-term power markets
instead of from baseload energy sold on the futures
and day-ahead markets (see Figure ES 3).

10
ANALYSIS | The Southeast European power system in 2030

Yearly average utilization rates and number of start-ups (per year) on a unit level
in the SEE region in 2017 (above) and 2030 (below)                                                               Figure ES 3

                                40

                                                                                                    Gas
                                35
                                                                                                    Nuclear

                                                                                                    Coal and lignite
                                30
                                                                                                    HFO/LFO
Number of start-ups in a year

                                25

                                20

                                15

                                10

                                 5

                                0
                                     0%   10%   20%   30%   40%       50%         60%       70%   80%      90%         100%
                                                              Yearly utilization rate [%]

                                40

                                35

                                30
Number of start-ups in a year

                                25

                                20

                                15

                                10

                                 5

                                0

                                     0%   10%   20%   30%   40%       50%         60%       70%   80%      90%         100%
                                                              Yearly utilization rate [%]

REKK

                                                                                                                               11
Agora Energiewende | The Southeast European power system in 2030

  Total available upward reserve in the SEE region, in all hours of 2017 and 2030                      Figure ES 4

                 40,000

                 35,000

                 30,000

                 25,000
 Capacity [MW]

                 20,000

                 15,000

                 10,000

                  5,000

                     0
                          1                                                                                 8,760

                                                               Hours
                                                        2017            2030

  REKK

The total available downward reserve capacity for              availability of sufficient interconnection capacity
all hours of the year will increase by 2030, mostly            between countries. Increasing interconnection lev-
because of the deployment of RES and natural gas               els between the countries can eliminate the missing
plants, both of which provide downward regulation.             production hours entirely, because countries with
The minimum downward reserve capacity will be                  this problem can rely on imported electricity from
ca. 11 GW in 2030 (27% of the regional peak load).             neighbouring power systems.

The number of hours with missing production will
be very low in 2030. The scenario showed hours                 Security of supply: Peak demand can be
with missing production in Albania, Kosovo and                 met in the winter season
North Macedonia. The missing production levels
occur in one or two hours of the year, which indicate          To illustrate the daily operations of the 2030 power
very low levels of load-shedding requirements. The             system in SEE, we describe a week in winter where
typical security of supply standards in the EU range           the remaining capacity (defined as the sum of
from three to six hours of loss of load expectation.           spinning and non-spinning reserve capacity and
                                                               non-utilized import capacity) is lowest.
The results of missing production levels and low
cross-border correlation of vRES feed-in empha-                Unlike today, the natural gas-based electricity gen-
size the importance of regional cooperation and the            eration patterns of 2030 will change from peak-load

12
ANALYSIS | The Southeast European power system in 2030

   Electricity generation and demand in the SEE region for the critical week in winter in 2030 in MW                Figure ES 5

                 45,000

                 40,000

                 35,000

                 30,000

                 25,000
 Capacity [MW]

                 20,000

                 15,000

                 10,000

                  5,000

                     0

                 -5,000
                          1   13        25   37    49   61     73        85   97     109      121      133   145      157

                              Nuclear                   Other RES                   Coal and lignite           Natural gas
                              Wind                      HFO/LFO                     Hydro                      PV
                              Missing production        Pumped storage              Consumption                Net import

   REKK

following to steadier generation because wind and                    hours. The higher volatility in production is indi-
PV output remains fairly low in the critical week.                   cated by the steeper “ramp-ups” and “ramp-downs”
(Wind and PV generation levels will nearly dou-                      of the blue area in Figure ES 6. Nonetheless, all elec-
ble compared to 2017, however.) Consumption peaks                    tricity demand will be met in the region (unserved
will mostly be managed by increased hydro uti-                       energy=0 GWh).
lization and increased net imports, whose greater
potential derives from increasing NTC levels. In the
first half of the critical week, net imports will serve              Security of supply: Sensitivity of varying
as “gap-fillers” while in the second half of the week                weather conditions and interconnector
they will be utilized on a more constant basis (see                  capacities
Figure ES 5).
                                                                     We analyzed scenarios with average, high and low
In 2030, the reserve margin will only occasionally                   generation from hydro, wind and PV (based on his-
reach 100%, while in peak hours it will still be 40–                 torical data) and a scenario with higher and lower
60%, which represents a sufficient level of reserves.                than expected interconnector deployment.
Due to the increased use of renewables and inter-
mittent generation, production will be more volatile                 In most weather-related sensitivity cases the num-
when compared with 2017, which means that the                        ber of start-ups increases, with the exception of the
need for reserves will be more pronounced in some                    low hydro and reference PV/wind case, where start-

                                                                                                                              13
Agora Energiewende | The Southeast European power system in 2030

  Reserve margin in the SEE region for the critical week in winter in 2030 in MW                                       Figure ES 6

                 70,000                                                                                                   200%

                                                                                                                          180%
                 60,000
                                                                                                                          160%

                 50,000                                                                                                   140%

                                                                                                                                 Capacity margin [%]
                                                                                                                          120%
 Capacity [MW]

                 40,000

                                                                                                                          100%

                 30,000
                                                                                                                          80%

                 20,000                                                                                                   60%

                                                                                                                          40%
                 10,000
                                                                                                                          20%

                     0                                                                                                    0%
                          1   13     25     37        49   61   73     85     97       109   121   133    145    157

                                   Total production             Total upward reserve               Available import
                                   Missing production           Consumption                        Reserve margin

  REKK

ups of conventional power plants decrease. The main                      TYNDP) would reach a satisfactory level in the 2030
reason for this rather unexpected result is that PV                      reference case.
and wind generation patterns and hydro availability
(dry or wet year) are not correlated. Consequently, it                   Figure ES 7 shows the non-satisfied demand for all
may happen that in a dry year with low hydro avail-                      scenarios. Non-satisfied demand amounts to only
ability and less volatility, more permanent wind                         a few gigawatt hours in the reference case and re-
conditions will prevail, which would offset overall                      mains the same in most sensitivity cases. As the
system volatility. Hence, low correlation among var-                     figure illustrates, the most important impact on
ious RES generation sources is an important enabler                      non-satisfied demand arises from altered NTC lev-
of vRES system integration.                                              els. With 20% higher NTCs, annual missing produc-
                                                                         tion drops to zero, while more than 240 GWh/year
The case with a 20% lower value of NTCs yielded                          demand is left unsatisfied (corresponding to only
more start-ups because countries would have to bal-                      0.1% of regional power demand), with 20% lower
ance their systems by relying more on power plants                       NTCs available. Three countries are primarily af-
within their borders given their limited access to                       fected: Albania, Kosovo* and North Macedonia. This
import. The higher NTC scenario (20% higher NTCs                         emphasizes the key role of interconnection capacity
than in the reference case) does not decrease the                        for security of supply.
level of start-ups. This means that the planned NTC
development in the region (in line with ENTSO-E’s

14
ANALYSIS | The Southeast European power system in 2030

  Missing production values (non-satisfied demand) for the sensitivity scenarios in GWh/year                                                       Figure ES 7

            300                                                                                                                                   0.120%

                                                                                                                                                            Total missing production/consumption [%]
            250                                                                                                                                   0.100%

            200                                                                                                                                   0.080%
 GWh/year

            150                                                                                                                                   0.060%

            100                                                                                                                                   0.040%

            50                                                                                                                                    0.020%

             0                                                                                                                                    0.000%
                       17

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                  AL        BA_FED            BA_SRP             BG            GR          HR           KO*           ME          MK         RO        RS

  REKK

Even though there is enough spare capacity on the                                         ernization or replacement in the next decade, we
regional level, the lack of interconnectors in the 20%                                    now have an excellent opportunity to introduce the
lower NTC sensitivity case hinders the full use of                                        50 to 55% share of RES in the region required by the
power plants in neighbouring countries, which, in                                         EU’s 2030 targets for climate and energy. Indeed,
turn, leads to unserved power demand in Albania,                                          the 2030 SEE scenario assessed in this report finds
Kosovo and North Macedonia. This underlines the                                           that RES-E shares of 50% are realistic in terms of
importance of interconnection levels in the SEE re-                                       system flexibility, RES integration and security of
gion. The planned infrastructure development can                                          supply. The scenario projects that the level of avail-
help countries maintain the flexibility and security                                      able upward reserve capacities will decrease rel-
of supply of the regional system, though the lack of                                      ative to 2017 because of higher vRES penetration.
interconnectors can leave some countries vulnerable                                       The available upward reserve capacity margin will
during certain critical hours.                                                            still be above 40% in the region during most hours,
                                                                                          and only for a few hours per year (under 15 hours)
                                                                                          will it fall to 35%. This indicates that a higher level of
Conclusions: Pathways for robust RES                                                      cross-border capacities within the SEE region would
deployment and security of supply in SEE                                                  help maintain the system adequacy throughout all
                                                                                          hours of the year. Moreover, the available downward
With roughly half of the installed hard coal and                                          reserve capacities will increase thanks to vRES po-
lignite generation capacity in SEE requiring mod-                                         tential to provide such services.

                                                                                                                                                                                         15
Agora Energiewende | The Southeast European power system in 2030

The results also indicate that the projected infra-        and the contribution of fossil-based generation to
structure developments of the analysed Decarboni-          system flexibility will help avoid zero marginal cost
sation Scenario - characterised by major reductions        vRES curtailment in 2030. This underlines the eco-
of coal- and lignite-based generation and steadily         nomic potential of efficient RES integration in the
increasing RES generation – will meet the growing          region.
demand of the region, achieving a nearly balanced
net import position at the regional level by 2030. As      The sensitivity assessment shows that intercon-
coal and lignite production decreases, vRES produc-        nections and market integration are key factors for
tion and gas-based generation will take their place        maximizing the security of supply and providing
(though the increase of gas-based generation will be       the required flexibility for vRES deployment in the
confined to just a few countries in the region). Note      SEE region. A limited level of non-satisfied demand
that the annual average utilization of gas plants in       will occur in Albania, Kosovo* and North Macedonia
the region is not projected to exceed 45% in 2030 for      due to increased network limitations. This under-
our sensitivity cases. Thus, the business model for        lines the importance of continuing the implemen-
conventional power plant operators is all about flex-      tation of cross-border infrastructure developments.
ibility, not simply about the sale of kilowatt hours. If   More importantly, market integration must be deep-
lignite utilization falls below 65%, lignite plants will   ened among SEE countries in order to utilize availa-
have a hard time earning sufficient revenue from           ble cross-border capacities efficiently. This not only
the power markets.                                         brings security of supply benefits; it also has an eco-
                                                           nomic rationale, for it gives the region greater access
The critical week assessment shows that the reserve        to the electricity markets of neighbouring countries
margin in the SEE system will stay above a healthy         in Central and Eastern Europe. Most importantly,
35% even during critical hours of the assessed weeks,      SEE can provide flexibility services to these coun-
which presents a satisfying level for the region en-       tries in seasons/years with higher levels of hydro
suring security of supply. At the same time, in most       availability.
hours of the year the region maintains an even
higher level of reserves: At over 100% of regional         In summary, a diverse mix of flexible generation
consumption in many hours, the SEE region will be          technologies in SEE (hydro technologies, flexible
able to provide flexibility services to neighbouring       biomass, natural gas and storage) can facilitate the
electricity systems such as those of Hungary and           integration of vRES – especially wind and PV. In
Slovakia, where flexible units are likely to be scarcer.   particular, reduced flexibility needs and increased
The analysis has shown that the most critical season       system reliability can be achieved by integrating
in SEE is autumn, where availability of hydro re-          countries and regions with fundamentally differ-
sources is limited due to lower water reservoir levels.    ent weather regimes. An interconnected European
This shows the need to diversify flexibility options       power system would be highly beneficial for vRES
through geography as well as technology.                   integration. Indeed, regional cooperation, stronger
                                                           power systems and market integration will help
The number of plant start-ups will also stay in the        minimize power system costs for consumers while
manageable range – below 40 start-ups a year for           maximizing supply security.
any conventional unit. By 2030, the system will
have many dedicated flexible gas units; several coal
and lignite plants will also contribute to the provi-
sion of system flexibility. Variable RES curtailment
will remain low because hydro-based generation

16
ANALYSIS | The Southeast European power system in 2030

Introduction

With the recently adopted EU 2030 targets for cli-              This study takes a deeper look into the future of re-
mate and energy, European power systems are about               gional market integration for power systems with
to embark on a major transition. By 2030 an av-                 high shares of wind and solar in SEE: what kinds
erage of 55% of electricity in Europe’s power grids             of flexibility requirements arise from the projected
must come from renewable energy sources. Now                    growth of these two technologies? And to what ex-
is therefore an auspicious moment for advancing a               tent can further power market integration within
clean-energy transition in South East Europe (SEE).             SEE and beyond help meet that challenge?
                                                                This study builds on the SEERMAP project, which
Countries throughout SEE have high shares of elec-              analyzes the region’s energy sector through long-
tricity generated by an aging fleet of coal-fired               term scenarios. We focus on the project’s “decarbon-
power plants. Some of the youngest coal plants in               ization scenario”, which assumes 93% decarboni-
the Western Balkans were built in 1988, before the              zation in the region’s power sector by 2050 (in line
break-up of Yugoslavia. Within the next decade,                 with EU goals) and a RES-E share of 50% in 2030 in
utility companies and governments will have to de-              the SEE region. The applied REKK’s European Elec-
cide whether to modernize or replace roughly 50%                tricity Market Model (EPMM) tool captures the in-
of the region’s existing coal and lignite generation            terplay between supply, demand and storage over an
capacity. Indeed, the recent SEERMAP project6 has               entire calendar year, i.e. 8760 hours. The scenario
demonstrated that deployment of renewable capac-                for the energy system in 2030 addresses the follow-
ity in the EU SEE and Western Balkans7 is not only              ing questions:
feasible but also has several advantages over fossil
fuel-based investment.                                          →→ Will SEE power demand be met in all hours in
                                                                   2030?
Solar photovoltaics (PV) and wind power – driven                →→ Will the SEE power system have a sufficient re-
by significant cost reductions – will almost cer-                  serve margin to guarantee the security of supply
tainly contribute to more than half of the RES-E                   in critical situations?
share in Europe in 2030. As wind and solar depend               →→ What will be the critical/vulnerable weeks or days
on weather, future power systems will be character-                in the system?
ized by fundamentally different generation patterns             →→ Will the system also be robust during extreme
from those observed today, significantly increasing                weather patterns? (e.g. in years of low precipita-
the need for flexibility in the non-intermittent part              tion or with lower number of hours of wind).
of the power system. In meeting the flexibility chal-
lenge, regional cooperation and cross-border power              Here are some of the key characteristics of the
system integration offer important ways forward.                model (its individual features are described in later
                                                                sections):

                                                                →→ All hours of a selected year are modelled;
6   See http://rekk.hu/analysis-details/238/south_east_eu-
                                                                →→ Its optimization takes places on a (rolling) weekly
    rope_electricity_roadmap_-_seermap
                                                                   basis, with the objective being to minimize sys-
7   In SEE, the EU member states are Bulgaria, Croatia,
                                                                   tem costs.
    Greece and Romania. The Western Balkans countries are
    Albania, Bosnia and Herzegovina, Kosovo, North Mace-        →→ The hours during the week are interconnected:
    donia, Montenegro and Serbia.                                  the operation of a power plant in a given hour has

                                                                                                                    17
Agora Energiewende | The Southeast European power system in 2030

   impact on its availability for the next hours. A
   yearly modelling sequence consists of 52 weekly
   optimization steps, where the weeks are also con-
   nected: information on the last hour of operation
   for the production units in the modelled week is
   passed on to the next week.
→→ Power plants in the model are represented through
   higher granularity (e.g. start-up costs, start-up
   time and minimum utilization rates) than in a
   typical power generation technology modelling
   characterisation (e.g. fuel type, fuel efficiency,
   marginal cost);
→→ EPMM covers the entire ENTSO-E power system,
   including EU member states and the contracting
   parties of the Energy Community.

18
ANALYSIS | The Southeast European power system in 2030

The modelling approach

The EPMM is a unit commitment and economic dis-                        power plants operate and their production levels. The
patch model, which during the optimization process                     model is executed for all weeks and hours (8760) of
satisfies electricity demand in the modelled coun-                     the year. To increase the robustness of the results, the
tries at minimum system costs while considering                        model starts the weekly optimization on Wednes-
the different types of costs and capacity constraints                  days and finishes on Tuesdays, to avoid that the fast-
of the available power plants and cross-border                         est ramp-up period (Monday morning) would be the
transmission capacities.                                               starting position of the optimisation. EPMM endoge-
                                                                       nously models 41 electricity markets in 38 countries.8
The model minimizes the production costs for satis-
fying demand. These costs include the start-up and                     The main inputs and outputs of the model are sum-
shut-down costs of the power plants, the costs of                      marized in Figure 1.
production (mostly fuel and CO₂ costs) and the costs
that occur in case of RES curtailment.
                                                                       8       In the cases of Bosnia and Herzegovina, Denmark and the
                                                                               Ukraine, two markets/price zones are distinguished per
The model simultaneously optimizes all 168 hours of a                          country; otherwise one market/price zone per country is
week and determines the hours of the week in which                             assumed.

  Main inputs and outputs of the EPMM model                                                                                Figure 1

             Marginal cost      Start-up and        Available
              production         shut-down          capacities
   Inputs

                                Cost curves of                     Country                            Cross-border
                                power plants                     consumption                           capacities
                                                                       Model
   Outputs

                Minimum cost            Missing              Downward and upward                Curtailment of       Number of
                of satisfying          production            capacities available for           RES producers         start-ups
                consumption                                     reserve services

  REKK

                                                                                                                                   19
Agora Energiewende | The Southeast European power system in 2030

The results of the optimization show how elec-                Renewable generation – apart from biomass and
tricity demand can be satisfied at a minimum cost             storage hydropower, is included exogenously as-
while yielding the optimal generation mix and the             suming zero marginal cost. Generation patterns are
required number of power plants start-ups in the              based on European weather data from 2006–2011
modelled region. The potential for missing produc-            for PV and wind generation and 2008–2017 for hy-
tion and the available upward and downward capac-             dro. These renewable technologies are non-dis-
ities for reserve services are also important outputs         patchable but can be curtailed at given costs.
of the model.
                                                              We distinguish between three categories of hydro
                                                              generation: run of river, pumped storage and reser-
Supply side representation in the model                       voir. The reservoir hydro units can flexibly produce
                                                              electricity with a maximum aggregate production
Power plants are represented at the unit/block level          constraint for the entire week. This allows the model
for each country and are divided into twelve tech-            to capture the flexibility of hydro generation while
nologies: biomass, hard coal- and lignite-based, ge-          placing a realistic limit on its overall contribution to
othermal, heavy and light fuel oil, hydro, wind, PV,          weekly and yearly electricity generation.
nuclear, natural gas and tide/wave power plants.

All generation units have the following inputs: in-           Demand-side representation in the
stalled capacity, electrical efficiency and self-con-         model
sumption. The short-run marginal costs of gen-
eration are calculated based on country- and                  Power demand is an exogenous input to the hourly
technology-specific fuel prices, variable operational         optimization of the power system. Hourly demand
costs, taxes and CO₂ emission costs. Start-up costs           data is derived from actual data for 2015, which is
are also included for dispatchable units (thermal,            adjusted in the scenarios proportionally based on
nuclear, storage hydropower and pumped storage).              the assumed growth of yearly consumption by 2030.
The start-up assumptions are summarized in Table 1.           Power demand is met by the available power plants

 Start-up costs and constraints for dispatchable technologies.                                               Table 1

               Unit    Nuclear   Lignite    Lignite     CCGT    Other     Gas       Small        Coal       Coal
                                 (>500MW)   (500MW)   (
ANALYSIS | The Southeast European power system in 2030

and the import capacities subject to minimisation of                  prices are not publicly available for many countries
the cost to serve demand.                                             in the EU, which makes it difficult to calibrate natu-
                                                                      ral gas-based production.

Transmission grid representation                                      To ensure robust results, various weather regimes
                                                                      are included in the modelling that account for the
In the EPMM model, each country represents one                        variability of renewable energy resources. This re-
node, so network constraints inside the countries are                 quired collaboration with the Vienna University of
not considered. Cross-border transmission capaci-                     Technology (TU Wien), which provided information
ties are represented by net transfer capacities (NTCs)                on RES production covering the whole ENTSO-E
values, which put an upper limit on cross-bor-                        system, including the SEE region. Data on variable
der electricity trading. Power exports and imports,                   RES production (i.e. solar PV, wind and hydro) and
therefore, may not exceed NTC values in any given                     on dispatchable RES are derived from TU Wien’s
hour. Imports and exports take place to minimize                      Green-X model.9 Historical weather data and pro-
system costs and maximize security of supply.                         jections for future installed capacities were used to
                                                                      generate RES generation patterns on an hourly basis.

Calibration of the model and input data                               More input data and assumptions for the EPMM
                                                                      model can be found in Appendix 1. The information
To ensure robust modelling results, the model was                     includes details about power plant capacities, fuel
calibrated to the latest available data (2017). Table                 prices and available NTC capacities for the modelled
2 illustrates the difference between the calibrated                   region.
model results and actual data for 2017. The differ-
ence between the two data sets is well below 6% for
the main production technologies. The only excep-                     9    For a recent study describing the GREEN-X model, see
                                                                           del Rio et al (2017): A techno-economic analysis of EU
tion is gas units, where the difference is 23% due
                                                                           renewable electricity policy pathways in 2030, Energy
to the sensitivity of the assumed gas prices. These                        Policy.

  Modelled and actual production share by technology in the EU, 2017.                                                       Table 2

   GWh       Total          Nuclear   Coal and   Natural   Run-of-        Pumped     Wind       Bio-      HFO,     PV        Other
                                      lignite    gas       river,         storage               mass      LFO                RES
                                                           storage

   Model      3 597 254     838 381   849 333    613 272   592 601         -5 223    386 419    177 953   12 894   117 391   14 233

   Actual    3 680 400      808 100   798 300    757 300   576 700            n.a.   370 300    174 200 29 300 114 600       12 600

   Differ-
   ence,          83 146    -30 281    -51 033   144 028    -15 901         5 223     -16 119    -3 753   16 406    -2 791   -1 633
   GWh
   Differ-
                     2.3%     -3.6%     -6.0%      23.5%     -2.7%            n.a.     -4.2%      -2.1%   127.2%    -2.4%    -11.5%
   ence, %

  REKK, ENTSO-E (2018)

                                                                                                                                      21
Agora Energiewende | The Southeast European power system in 2030

22
ANALYSIS | The Southeast European power system in 2030

The SEE power system in 2030

Though situations will vary significantly from                 average performance of the markets/power sys-
country to country with regard to domestic resource            tems and the robustness of the system in critical
availability (hydropower, solar irradiation, wind              situations. We conclude with a sensitivity analysis.
speed), renewables are expected to be “mainstream”             Throughout this report, the term “SEE region” refers
by 2030 throughout Europe. The assessed decarbon-              to the Western Balkan countries (Albania, Bosnia
ization scenario assumes a 2030 RES-E share rela-              and Herzegovina, North Macedonia, Kosovo*, Mon-
tive to gross consumption of 48%10 in Europe and of            tenegro and Serbia) and the EU countries Bulgaria,
50% in SEE.                                                    Croatia, Greece and Romania.11

This section looks at this scenario in detail. We start
by assessing the aggregated yearly results and then            Yearly electricity mix in SEE
study potentially critical weeks with tight supply/
demand situations. In this way, we measure both the            Figure 2 shows the annual power mix for the SEE
                                                               region in 2017 and 2030.
10 See also Fraunhofer IWES (2015): The European Power
   System in 2030: Flexibility Challenges and Integration
   Benefits. An Analysis with a Focus on the Pentalateral      11 *This designation is without prejudice to positions on
   Energy Forum Region. Analysis on behalf of Agora Ener-         status, and it is in line with UNSCR 1244 and the ICJ
   giewende.                                                      Opinion on the Kosovo declaration of independence.

  Electricity generation mix of the SEE region, 2017 (actual data) and 2030 (decarbonization scenario)           Figure 2

          300

          250

          200                                                                              58

                                    139
                                                                                           14
  [TWh]

          150                                                                               8
                                                                                           21

          100                        7                                                     47
                                     3
                                    13

                                    40                                                     42
           50
                                     7                                                      1
                                     4
                                    25                                                     36
            0
                                   2017                                                    2030
                    Nuclear        Coal         Natural gas       Hydro          Wind

                    Biomass         PV          Geothermal and other RES         Lignite           Consumption

  REKK

                                                                                                                           23
Agora Energiewende | The Southeast European power system in 2030

The most important change for the region is the            eration and a smaller increase in RES generation.
sharply falling share of coal- and lignite-based gen-      Meanwhile, the net export positions of Greece and
eration. Compared with 2017, less than half of the         Romania will increase because the decreasing coal-
production from these fuels will remain in the sys-        and lignite-based generation will be more than com-
tem by 2030. The reduction will be compensated by          pensated by natural gas and RES-based generation.
an increase in RES generation of 20 TWh, in natu-
ral gas-based production (25 TWh) and in nuclear
generation (11 TWh). The region will move from a           Impact of RES on conventional power
net export to a net import position, but the yearly net    plants: Start-ups and utilization rates
import ratio will remain relatively small – 6.8%. The
capacity mix changes significantly in the decar-           Both in Europe and in the SEE region, the 2030 sce-
bonization scenario, with a shift away from fos-           nario shows a more flexible utilization of power
sil-based capacity towards renewable capacity. The         plants based on an increase in the number of start-
changes are driven primarily by rising carbon prices       ups per unit. This is a consequence of a lower uti-
in EU countries and decreasing renewable technol-          lization of conventional power plants due to the
ogy costs. Although the Western Balkan countries           increased generation of variable RES and the dete-
are assumed to have carbon prices only from 2030,          riorating economic performance of coal and lignite
in the scenario only 1500 MW new fossil based              plants. Climbing fossil-fuel costs, carbon prices and
generation is installed in the SEE region, due to the      increasing investment costs place fossil-fuel-fired
assumed economic environment: increasing carbon            plants at the end of the merit order curve, resulting
prices elsewhere, rising coal and natural gas prices       in a lower number of operation hours. This impact is
and deteriorating utilization rates of fossil gener-       further amplified by the growing production of ze-
ation. Over the long-term, lignite- and coal-based         ro-cost PV and wind generation, which on account
generation will not be able to reach the required          of the “merit order effect” will supplant more and
utilization levels needed to cover the increasing in-      more fossil fuel plants from the pool of generators.
vestment costs and meet the higher emission stand-         Even though the number of start-ups will increase,
ards set by new European legislation.                      by 2030 the total start-up costs as a share of variable
On a country-level, Bosnia and Herzegovina, Bul-           generation costs will only amount to 1% in both the
garia, Kosovo*, North Macedonia, Montenegro and            EU and in SEE (see Table 3).
Serbia will become net importers of electricity due
to a strong decrease in coal- and lignite-based gen-

  Fossil-based dispatchable power plants and cost of start-ups in 2017 and 2030.                            Table 3

                                                           Number of                                     Start-up
                                 Number     Number of                  Total variable   Total start-up
                                                           start-ups                                     cost/total
                                 of units   start-ups                  cost, m€         cost, m€
                                                           per unit                                      cost

                     2017          2202         14365           6.5        70636             721          1.02%
     Europe
                     2030          1522         13245           8.7        77664             906           1.17%
                     2017           167           441           2.6         4443              24          0.54%
     SEE
                     2030            89           798           9.0         5824              60          1.04%

  REKK

24
ANALYSIS | The Southeast European power system in 2030

At the same time, the utilization rates of the differ-      in “flexibility services mode”. In the future electric-
ent types of power plants will have changed signif-         ity system, they will provide more system balancing
icantly by 2030, with the utilization of natural gas        and flexibility services and receive more of their in-
plants climbing to 40% from 7.5% in 2017 and the            come from short-term power markets instead from
utilization of hard coal-fired plants growing from          baseload energy sold on the futures and day-ahead
20% to 34% in the SEE region. The utilization of lig-       markets.
nite-fuelled plants is projected to fall in Europe and
in the SEE region, down from 81% to around 68%,
due to deteriorating economic performance and re-           Transmission grid constraints and RES
duced operating hours (see Table 4).                        curtailment

To gain a deeper understanding of how electric-             The model has the option of curtailing vRES produc-
ity markets function in the modelled years for SEE,         ers (variable RES: PV and wind generators) if needed
we analyzed the relationship between utilization            for system stability when interconnectors are fully
rates and the number of start-ups in detail. Figure 3       utilized and surplus generation cannot be exported.
shows the 2017 and 2030 yearly average utilization          In keeping with European legislation, curtailed RES
rates of non-RES power plants on a unit level.              producers are compensated for their curtailment at
                                                            the level of their forgone revenue.12 The model does
The most important change between 2017 and 2030             not need to utilize this option often, as just a few EU
is that more and more power plants will be oper-            countries – Spain, Portugal and Italy – hit curtail-
ated in “peak load” mode: natural gas power plants          ment levels in certain hours. In Europe, curtailment
with low yearly average utilization rates and a high        will not exceed 500 GWh a year in 2030,13 and it
number of start-ups (up to 35 times/year). For com-         will remain zero in the SEE region. The alternative
parison, the highest number of start-ups for a given        of non-compensation of RES curtailment was also
unit in 2017 was less than 20 in SEE. By 2030 more          tested, and confirmed robustness of the results. In
than half of the gas-fired units will actively pro-
vide flexibility services. The utilization structure        12 See Art. 12 of the recently adopted Electricity Market
of coal-, lignite- and HFO-LFO-fuelled plants will             Regulation.
change similarly by 2030 – increasingly operating           13 This corresponds to 0.014% of European power demand.

  Utilization rates for different power plant technologies, 2017 and 2030.                                    Table 4

                                                SEE                                         Europe
                                 2017           2030         Change            2017          2030          Change
                Nuclear          84.8%         85.2%           0.3%            79.2%         81.0%            1.7%
                Natural gas       7.5%         39.9%          32.4%            27.0%         31.2%            4.1%

  Utilization   Hard coal        20.2%         33.8%          13.5%            36.2%         46.1%           9.9%
  rate          Lignite          77.6%         63.3%         -14.4%            80.4%        68.4%           -12.0%
                HFO               0.1%           1.3%          1.2%             4.5%          0.9%           -3.7%
                LFO               0.0%          0.0%           0.0%             7.3%          0.5%          -6.8%

  REKK

                                                                                                                        25
Agora Energiewende | The Southeast European power system in 2030

 Yearly average utilization rates and number of start-ups (per year) on a unit level
 in the SEE region in 2017 (above) and 2030 (below)                                                                      Figure 3

                                  40

                                                                                                      Gas
                                  35
                                                                                                      Nuclear

                                                                                                      Coal and lignite
                                  30
                                                                                                      HFO/LFO
  Number of start-ups in a year

                                  25

                                  20

                                  15

                                  10

                                   5

                                  0
                                       0%   10%   20%   30%   40%       50%         60%       70%   80%      90%           100%
                                                                Yearly utilization rate [%]

                                  40

                                  35

                                  30
  Number of start-ups in a year

                                  25

                                  20

                                  15

                                  10

                                   5

                                  0

                                       0%   10%   20%   30%   40%       50%         60%       70%   80%      90%           100%
                                                                Yearly utilization rate [%]

 REKK

26
ANALYSIS | The Southeast European power system in 2030

case of non-compensation curtailment levels in-                                pattern in the correlation of wind generation. Even
crease slightly due to market-based decisions of RES                           within the SEE region, wind speeds show weak cor-
producers. However, it still represents a minor level                          relations, ranging from 11% to 46%. These fairly low
of 500 GWh in Europe. The main reason for this low                             correlations suggest that wind generation would not
level of vRES curtailment is the availability of flexi-                        peak at the same time within the region; rather, it
ble hydro resources in the region that can satisfy the                         would be dispersed over time.14 It also suggests that
flexibility need in the power system according to the                          the region would follow a different wind generation
model results, the availability of interconnectors, the                        pattern from northern European countries, which
flexibility potential offered by imports and exports
and the low correlation between RES feed-in across
borders.                                                                       14 This confirms earlier research testing the correlation
                                                                                  of wind power feed-in between the countries of the
                                                                                  Pentalateral Energy Forum (Austrian, Belgium, France,
PV generation is highly correlated within the re-                                 Germany, Luxembourg, the Netherlands, Switzerland)
gion, with correlation coefficients ranging from 87%                              where correlation coefficients ranged from 24% (Austria
to 100% between the countries, depending on their                                 and Belgium) to 66% (Luxembourg and Belgium). For more
proximity. This is indeed to be expected, as the dif-                             details, see Fraunhofer IWES (2015): The European Power
                                                                                  System in 2030: Flexibility Challenges and Integration
ference is mainly caused by the sun’s daily perio-
                                                                                  Benefits. An Analysis with a Focus on the Pentalateral
dicity. However, and importantly for easing vRES                                  Energy Forum Region. Analysis on behalf of Agora Ener-
system integration, we observed a very different                                  giewende.

    Time series of onshore wind power generation in a simulation for the first week
    of 2030 at different levels of aggregation                                                                                Figure 4

                                                 60%
 Actual wind generation/installed capacity [%]

                                                 50%

                                                 40%

                                                 30%

                                                 20%

                                                 10%

                                                 0%
                                                       1   25   49        73           97              121          145            169

                                                                               Hours

                                                                     RO          SEE          Europe

    REKK

                                                                                                                                      27
Agora Energiewende | The Southeast European power system in 2030

means that wind production would not peak at the                      Security of supply: Available reserve
same time in the wider European region.15                             capacities

As can be seen in Figure 4, periods of little or no                   a) Downward and upward reserve capacities
wind power in 2030 will be less frequent and total                    One of the main features of the EPMM model is its
output changes will become softer and slower. These                   ability to calculate the remaining available upward
effects will help lower flexibility requirements in                   and downward reserve capacities in all hours for all
the region.                                                           countries individually. These reserve capacities can
                                                                      step in if demand unexpectedly rises in real-time or
                                                                      if generation unexpectedly drops in real-time (e.g.
                                                                      due to a power plant outage or lower than forecasted
                                                                      RES generation). Figure 5 shows the total availa-
15 For example, Grams C. et. al. (2017) find that balancing           ble downward reserve capacity for all hours of the
   future wind capacity across regions – deploying slightly           year (in descending order) in the SEE region. There
   more capacity in the Balkans than at the North Sea, say –          is no single hour in 2017 or 2030 when a shortage
   would eliminate most wind production output variations,
                                                                      of downward reserve could be identified. Moreover,
   better maintain average generation and increase fleet-
   wide minimum output. See Grams et al (2017): Balancing
                                                                      the situation improves in 2030 even more, mainly
   Europe’s wind-power output through spatial deployment              due to the deployment of RES and natural gas plants,
   informed by weather regimes. Nature Climate Change.                which can both provide downward regulation. The

  Total available downward reserve in the SEE region, in all hours of 2017 and 2030                             Figure 5

                 40,000

                 35,000

                 30,000

                 25,000
 Capacity [MW]

                 20,000

                 15,000

                 10,000

                  5,000

                     0
                          1                                                                                       8,760

                                                                      Hours
                                                               2017            2030

  REKK

28
ANALYSIS | The Southeast European power system in 2030

  Total available upward reserve in the SEE region, in all hours of 2017 and 2030                          Figure 6

                 40,000

                 35,000

                 30,000

                 25,000
 Capacity [MW]

                 20,000

                 15,000

                 10,000

                  5,000

                     0
                          1                                                                                  8,760

                                                                Hours
                                                         2017            2030

  REKK

minimum downward reserve capacity is projected                  able capacity drops below 15% of consumption, and
to be ca. 11 GW in 2030 – this corresponds to 27% of            it never falls below 12%. General evaluation criteria
the regional peak load.                                         indicate that a minimum of 5–10% of consumption
                                                                is needed for upward reserve capacity to guarantee
For upward reserve capacities, somewhat differ-                 security of supply. By these lights, the SEE region
ent patterns can be observed. The amount of availa-             will have a sufficient level of supply security in
ble upward reserve capacities in 2030 is lower than             2030 (see Figure 7).
in 2017. This is the result of a drop in the number of
dispatchable units fuelled mainly by coal and lignite.          b) Missing production
Still, the upward reserve capacities are not expected           Another widely used evaluation criterion for secu-
to fall below 5 GW in 2030, which corresponds to                rity of supply is the number of hours with missing
12% of the regional peak load. For the vast majority            production. There was no such modelled hour in the
of hours in 2030, upward reserve capacities do not              region in 2017, while the model predicts low levels
drop below 20 GW (see Figure 6).                                of missing production in 2030. Table 5 indicates the
                                                                number of hours in which capacities are insuffi-
To assess whether this drop is critical, we compared            cient. The scenario shows hours with missing pro-
the total available upward reserve capacity with                duction in Albania, Kosovo* and North Macedonia.
total consumption in SEE for all hours of the mod-              However, the missing production levels occur in one
elled years. There are only 5 hours in which avail-             or two hours of the year, which indicate very low

                                                                                                                     29
Agora Energiewende | The Southeast European power system in 2030

     Total available upward reserve in the SEE region by percentage of consumption, 2017 and 2030                                               Figure 7

                                        250%

                                        200%
 Total upward reserve/consumption [%]

                                        150%

                                        100%

                                        50%

                                         0%
                                               1                                                                                                  8,760

                                                                                                   Hours
                                                                                            2017            2030

     REKK

                                                                                                   load-shedding requirements. The typical security of
     Number of hours with missing production                                                       supply standards in the EU range from three to six
     in the SEE countries.                                                       Table 5
                                                                                                   hours of loss-of-load expectation.

                                               Number of hours with missing production
                                                                                                   The results on missing production levels and low
                                                      2017                 2030
                                                                                                   cross-border correlation of vRES feed-in empha-
                         AL                             0                    1
                                                                                                   size the importance of regional cooperation and the
                         BA_FED                         0                    0
                                                                                                   availability of sufficient interconnection capacity
                         BA_SRP                         0                    0
                                                                                                   between countries. As can be seen in the sensitiv-
                         BG                             0                    0
                                                                                                   ity analysis later in the report, increasing intercon-
                        GR                              0                    0
                                                                                                   nection levels between the countries (represented
                        HR                              0                    0
                                                                                                   by increasing NTC values) can eliminate missing
                        KO*                             0                    2
                                                                                                   production hours entirely, because countries with
                        ME                              0                    0
                                                                                                   this problem can rely on imported electricity from
                        MK                              0                    1
                                                                                                   neighbouring power systems. Though the sensitiv-
                        RO                              0                    0
                                                                                                   ity case with decreasing interconnection capacities
                        RS                              0                    0
                                                                                                   still shows missing production in the system, it re-
     REKK
                                                                                                   mains a very low fraction of the total.

30
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