Wind power, network congestion and hydro resource utilisation in the Norwegian power market

Capacity constraints in electricity networks can have important impacts on utilization of new renewable energy (RE) capacity and incumbent generation resources. Neglect of such impacts in development of RE resources can result in crowding-out of incumbent generation. This trade-off is particularly problematic if the incumbent generation also consists of renewable sources, such as hydropower in the Norwegian electricity system. This paper presents a numerical analysis of the current wind-power development plans in North Norway and their impacts on utilization of hydropower. Policy simulations in paper are conducted using a dynamic partial equilibrium model that is calibrated to reflect the structure of the Nordic power market. The paper draws conclusion and policy implications for integration of RE resources in the Norwegian power market. (Author)