Energy Transition: The Impact of Increasing Energy Production from Renewable Sources on the Commercial Optimization Process of Conventional Power Generation Assets

Abstract

Changing the way electricity is produced, as part of the energy transition process, brings new challenges to the energy industry and in particular to the power generation practices. The switch from energy systems based on fossil fuels to generation technologies based on renewable sources is proving to be much more complex than expected. Multiple recent studies have shown that the intermittency in renewable production processes is putting pressure on the system and increasing balancing and maintenance costs of the grid, calling for an efficient management of the electricity produced. Therefore, a complete phase-out of conventional power generation units (e.g. coal, gas and nuclear) is still difficult to imagine in practice, mainly because of their role in balancing the system during the hours when renewables are not available (e.g. no wind, no sun or reduced hydraulicity). From the perspective of technical and commercial management aspects, the operation of conventional assets involves the consideration of multiple constraints (such as a longer operating time before they are shut down, or a longer preparation time before they can be restarted) in order to avoid financial loss and further damages. Therefore, the aim of this is to: 1. study the impact brought by the large installed capacity of renewable assets on the energy system; 2. analyse the options for gradual phase-out of conventional assets, from the perspective of system stability; 3. draw conclusions on how the commercial optimization of the production assets should develop as the energy transition advances. The novelty of this paper lies in the fact that it makes a business study of this transition process, which does not really exist yet, and case and simulation studies, along with statistical and time series analysis were used as a methodological approach for the research.