The impact of introducing zonal pricing within GB on investment signals to low carbon generation

Student thesis: Doctoral Thesis

Abstract

This work has investigated the premise that utilising zonal pricing for congestion management within Great Britain (GB) with Scotland as a separate price zone than the rest of GB could disincentivise investment in wind generation within areas of the highest wind resource. Computational modelling has shown consistently less installed wind capacity in Scotland in scenarios representing zonal pricing compared with scenarios representing the current GB system. This suggests that in the long term implementing zonal pricing within GB could negatively impact on the investment of low carbon generation in locations with the best renewable resource, which would be the most cost-effective method of meeting carbon reduction targets under the UK Levy Control FrameworkThe interaction between investing in low carbon generation within multiple price zones and the subsidy framework including a feed-in tariff with Contracts for Difference (CfDs) is a key focus of this work. Multiple scenarios are developed following a discussion of form that the CfD scheme could take in a two-zone GB. These comprise of a base case scenario representing current electricity trading within GB, a scenario in which the current competitive auction system does not change and CfD strike prices remain GB-wide and a scenario in which locational strike prices are introduced.Computational modelling has taken the form of a two-node linear solver to introduce and discuss the potential impacts of two price zones in GB on investment in low carbon generation and the Scottish Electricity Dispatch Model (SEDM), an eighteen node investment and dispatch model with greater spatial and temporal complexity and thus a more accurate representation of the GB system. The modelling methodology includes representing a range of objective functions, which has been shown to significantly affect the zonal results. Cases have also been revealed in which the SRMC iteration process did not converge for the two zone solver, highlighting the potential issues involved with modelling a subsidy framework like the CfD mechanism within multiple price zones.
Date of Award16 Jun 2020
Original languageEnglish
Awarding Institution
  • University Of Strathclyde
SponsorsEPSRC (Engineering and Physical Sciences Research Council)
SupervisorKeith Bell (Supervisor) & Graeme Hawker (Supervisor)

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