Abstract:Hydropower represents an important pillar of electricity systems in many countries. It not only plays an important role in mitigating climate change, but is also subject to climate-change impacts. In this paper, we use the Swiss electricity market model Swissmod to study the effects of changes in water availability due to climate change on Swiss hydropower. Swissmod is an electricity dispatch model with a plant-level representation of 96% of Swiss hydropower plants and their interrelations within cascade structures. Using this detailed model in combination with spatially disaggregated climate-change runoff projections for Switzerland, we show that climate change has ambiguous impacts on hydropower and on the overall electricity system. Electricity prices and overall system costs increase under dry conditions and decrease under average or wet conditions. While the change of seasonal patterns, with a shift to higher winter runoff, has positive impacts, the overall yearly inflow varies under hydrological conditions. While average and wet years yield an increase in inflows and revenues, dry years become drier, resulting in the opposite effect. Even though different in magnitude, the direction of impacts persists when applying the same changes in inflows to the 2050 electricity system.

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Swiss Hydropower (HP) is currently facing a wide range of challenges that have initiated a debate about future prospects and its role within the envisioned energy transition. Building on this debate, this paper provides an overview of the status and prospects of Swiss HP by identifying and evaluating the different drivers and uncertainties that Swiss HP faces. Based on a review and the perceptions held by some of the main Swiss HP stakeholders the two main topics that need to be addressed are the market driven impacts and the political, legal and social aspects. While the market dynamics cannot directly be influenced by Swiss companies or authorities, the regulatory framework can and needs to be adjusted. However, this requires a comprehensive stakeholder process and is at least a medium-term process.

In an electricity system, demand and supply have to be balanced in real time. Since most energy is traded before real time already in forward, day-ahead and intraday markets imbalances can occur. To ensure the balance between demand and supply even if power plants deviate from their schedules, the system operator procures balancing capacity and energy in balancing markets. The market outcomes may significantly differ from one country to the other depending on the underlying generation technologies and market design. In this paper, we have a look at the balancing market prices of a hydro-dominated electricity system using Switzerland as a case study. By using a short-term hydropower operation model and a set of Swiss hydropower plants, we are able to identify a competitive benchmark for Swiss balancing market prices defined by the opportunity costs of hydropower for providing balancing capacity. Our results show that Swiss balancing market prices are influenced by several drivers but do not hint at any market imperfections.

Abstract:Hydropower reservoirs play an increasingly important role for the global electricity supply. Reservoirs are anthropogenically-dominated ecosystems because hydropower operations induce artificial water level fluctuations (WLF) that exceed natural fluctuations in frequency and amplitude. These WLF have detrimental ecological effects, which can be quantified as losses to ecosystem primary production due to lake bottoms that fall dry. To allow for a sustainable development of hydropower, these "ecological costs" of WLF need to be weighed against the "economic benefits" of hydropower that can balance and store intermittent renewable energy. We designed an economic hydropower operation model to derive WLF in large and small reservoirs for three different future energy market scenarios and quantified the according losses in ecosystem primary production in semi-natural outdoor experiments. Our results show that variations in market conditions affect WLF differently in small and large hydropower reservoirs and that increasing price volatility magnified WLF and reduced primary production. Our model allows an assessment of the trade-off between the objectives of preserving environmental resources and economic development, which lies at the core of emerging sustainability issues.