The energy sector, in particular the electricity sector, is changing rapidly. More and more renewable energy is currently fed into the electricity grid, reducing the market share of conventional sources. Although we know this change has many consequences – intended and unintended – it is not at all certain what these changes will bring in the long run. Besides the increase of renewable energy in the electricity mix of European countries, these markets become more and more connected. These were the topics of the student field trip (some 18 attendees from RUG, a.o.) to Engie in Zwolle and APX in Amsterdam.

At the headquarter of Engie in Zwolle the structure of subsidy system schemes and the implications of renewables for other sources were discussed. Although electricity from solar panels and onshore and offshore turbines did increase their market share in recent years, the sun is not always shining and the wind is not always blowing. Therefore conventional sources are still needed to meet electricity demand at present. However, conventional sources do need to receive enough compensation to maintain their plants. This can be solved by a so-called capacity mechanism which ensures that electricity supply can match demand in the near future and for the long term. Such a system was recently implemented in UK and the need for such a system in the Netherlands was discussed with Engie.

In Amsterdam, market coupling was discussed. This might be beneficial for Dutch consumers for several reasons: it will increase competition between producers, it will lead to benefit from cheap electricity produced by renewable sources in other parts of Europe or to use of other markets to ‘store’ electricity. Through physical connections with Germany we can utilise electricity produced by the wind parks and solar installations there via connection with Norway.  Electricity can flow to Norway if demand is high and prices are low in the Netherlands. With this electricity, water reservoirs can be filled and these can be used to produce electricity at moments when supply is limited in the Netherlands and the prices are therefore high. There are roughly two ways which this can be done, by connections and by ‘smarter’ connections. By an algorithm the most efficient and therefore welfare increasing electricity flows are calculated.

On this field trip we learned a lot about the current developments and the ongoing in the energy sector. It was especially interesting to see first hand how theoretical ideas were implemented at APX and how energy firms deal with the consequences of renewable energy for the other conventional participants in the electricity sector. These excursions  help to provide students with a more practical picture of the opportunities after their studies and to give background information about issues that are normally analysed in theory. A valuable attribution to the regular curriculum.

 

Mark Rook is currently studying for two master’s degrees, one in Finance and the other in Economics. Previously he had an internship at the Dutch Ministry of Economics Affairs – in the Netherlands – at the department of renewable energy. In addition to his courses, he is student assistant of Prof. M. (Machiel) Mulder, professor of regulation of energy markets.