Abstract:
The power industry is switching worldwide from fossil-based technologies to renewables, fostered by government policies aiming for decarbonization and energy independency. Whereas variable renewable energy sources (VRES) bring some contributions, a large share of VRES in electric power industry has a considerable impact on supply security due to their intrinsic structure of seasonality and variability. In that context, this study aims to construct a System Dynamics (SD) model concentrating on the impacts of VRES on electricity generation mix in Turkey, focusing on system reserve margin, unit price of electricity and carbon emissions. The model consists of components representing capacity investment, demand formation, price formation, and future demand allocation. By integrating hourly data of available capacities into a simulation running in months, the model incorporates fast dynamics into the long-term model with slow variables. It adopts a high level of aggregation, classifying all the production capacity either as VRES or dispatchable. The main distinction between dispatchable and variable generation units is based on the technical characteristics of these power technologies. The capacity from dispatchable units could be increased or decreased by a system operator to satisfy demand by dispatching the generators to supply power according to their marginal costs while VRES capacity is directly related to such weather conditions as wind speed, water flow and cloud cover. Model is tested under two different electricity market mechanisms, one is Turkish spot market (day-ahead market), the other is bilateral contract-based mechanism. In scenario analysis on carbon tax, carbon dioxide emissions reduce but spot electricity prices increase at around variable costs of dispatchable units and investors tend to invest more on variable power plants. Without long-term contracts, carbon dioxide emissions decrease due to the decline in installed capacity of dispatchables. With this 2nd scenario more VRES units enter into the market to dispatch their energy due to their merit order effect. In the 3rd scenario, to select a weekend day as a typical day reveals that carbon emissions become lower because of less installed capacity in the market. Moreover, average spot prices are much higher which is primarily caused by the lower reserve margin in the electricity market.
