JultikaUniversity of Oulu repository

Abstract

The electricity market has been seen in transition due to climate change, increasing use of renewable energy sources, reduced use of fossil fuels and increased use of electricity. The purpose of this thesis is to analyse how the electricity market changes will affect to electricity prices and could major electricity users gain economically of the future changes. Thesis focuses mainly in the Nordic Electricity market, but the subject has also been studied from the global perspective.

Market changes and increased use of renewable energy sources are most likely affect a higher variation of market prices and increasing need of flexible demand due to intermittent nature of production of renewable energy sources. In the literature review, demand-side management (DSM) has presented as a possible solution for future electricity. This thesis focuses especially on the use of real-time pricing -model as a tool to implement DSM. Real-time pricing -model has been shown to be an economically efficient way to implement demand-side management. In the empirical section, the scenario analysis of demand-side management and real-time pricing model by using electricity intensive production plant consumption data. The effects of real-time pricing have been studied by optimising the consumption data with respect to electricity prices. According to previous related studies, the major electricity users can benefit economically of real-time pricing model if they can act in response to the market signals. Findings in this thesis are quite consistent with this view. According to the results of the empirical section, the electricity-intensive production plant can reduce its total and average electricity costs per MWh by using the real-time pricing model. The empirical study has been made by optimizing the historical and descriptive future data which does not necessarily describe the future or real life. Therefore, the results should be considered indicative due to the restrictions of the study.