ProdRisk-SHOP simulator

How can we calculate the future value of investments and upgrades in hydropower plants? The researchers have created a simulator to calculate operating income from power production.

Power line at Roskrepp power plant. Photo: Juliet Landrø

It is expected that there will be more electricity from wind power and solar power in the energy system, which will increase the need for balancing from adjustable hydropower. The value of hydropower's flexibility is thus expected to increase, but how should this value be calculated in concrete investment and upgrading projects? Does the investment cost, for example, justify the increase in flexibility that a given upgrade entails?

In order to find an answer to that, the researchers have created computer models that calculate what they think the prices will be during the life of the investment, and what operating income a given investment will give, assuming that you know what the price forecast is.

Simulator for operational income

Estimates for future production income are very important input when assessing whether an investment or upgrade of a hydropower plant is profitable or not. The computer model ProdRisk is today one of the most used tools for such analyses, while a much more detailed model, SHOP, can simulate operations week by week. Now the researchers have created a simulator that combines the best of these two computer models.

The prototype "ProdRisk-SHOP simulator" is designed to be able to simulate a near-optimal operation of an arbitrary production system and thus also calculate the production income for the system.

In a future power system, it is expected that hydropower will play a more important role in balancing the power system. It will also be operated in a more extreme way, in that, for example, it must run at maximum production more often, or that the water reservoirs are emptied more often.

Thus, it becomes more important to model all the physical relationships that limit the flexibility of the system as correctly as possible. In ProdRisk, for example, you cannot model that the water flow in a tunnel is dependent on pressure head or that there are wear and tear costs associated with starting and stopping a hydropower unit.

The new simulator can do something about this.

The simulator takes the value of the water from ProdRisk and simulates the operation week by week using a much more detailed model (SHOP). The advantage is that it is more correct in relation to the actual conditions in the power system, thus it shows a more realistic forecast. ProdRisk and SHOP are existing models designed for different areas of use. The simulator combines the best features of these models in a new tool designed specifically for input calculations for investment analyses.

The researchers will now further develop the prototype, among other things, with a view to taking income from capacity markets into account.