Market cannibalism in the European Energy Market
As Europe proceeds towards the Green Deal 2050, market cannibalism in the energy sector may remove baseload from the system. How can the weather phenomenon Dunkelflaute result in a total blackout for the 2035-2040 electricity market?
Energy and renewables markets
Thesis project description
The master thesis will research how EU policies will result in market cannibalism for baseload providers, its effects on national energy security, and what the solutions may be. Utilizing my background within renewables, energy markets, and system integration of wind power.
My profound interest in this topic and my fascination with the EU energy markets and renewables, have led me to this topic. This is one of the biggest problems the European electricity market will face in the future. The current energy crisis illustrates the importance of having energy producers which can provide energy securities to the grid. With work experience as a power market analyst, I know that this is a legit problem industry wants an answer to. What will be the solution? What kind of mechanisms do we need to withstand a Dunkelflaute? Can we balance the EU grid on energy production from renewables? Will the solution be a hybrid between nuclear and renewables?
NOTE: This topic encompasses a wide variety of sectors. It will be necessary to narrow it down.
EU strives to be the first climate-neutral continent by 2050 (European green deal). Implementation of new energy policies in combination with renewable energy construction will make (on paper) Europe green by 2050. EU policies aim to deliver secure, sustainable, and affordable energy for citizens and businesses. Future predictions estimate a rising energy demand, which the EU promises will be compensated by clean green energy.
Moving toward this transition, the progressive cost for fossil-based energy providers will be unacceptable, resulting in unprofitability and thus decommissioning. CCS might be used as an alternative, however, the technology is not compatible or economically viable for large-scale CO2 compensation (current technologies).
The current energy crisis illustrates the importance of having energy securities in the grid. Baseloads provide energy security. Set aside hydropower, there are currently no renewable technologies that can provide, with certainty, a baseload over a long period. Because of daily, weekly, and seasonal changes in wind/solar availability.
Today’s situation may foreshadow what can happen in the future. High prices in the commodity market, shortage of gas storage, hydro scarcity, and nuclear maintenance, combined with high demand, results in higher energy prices. Fossil-based energy providers produce electricity on margins to support the demand. On the other side of this spectrum, renewable providers (wind energy producers) earn huge profits based on the current scenario.
The same thing may happen towards the European green deal transition. An increase in CO2 pricing, political incentives, public opinions, and market mechanisms may force fossil-based energy providers out of the market, thus the term "market cannibalism". This is beneficial in terms of CO2 reduction and electricity prices, but in terms of energy security and markets, may have catastrophic effects. The big question is, can such a system withstand long periods with clouds and little wind? (Dunkelflaute)
Managerial value of the research
My hypothesis, if proven, could potentially have a great impact on the future decision-making of the European commission. The budget for the European green deal is set to be 1.8 trillion euros. This may be one of the biggest arguments why nuclear energy is to be of great importance, in combination with renewable energy. Together they can contribute to CO2-neutral energy production, thus meeting the EU's ambitions. The thesis can have a profound advantage to shareholders, especially towards energy technology investments. This knowledge would be available to you as my partner before any of the other players in the field would have the same insights. I believe this will be very valuable and of great competitive advantage.
Research topic motivation
After working with the energy markets, I realized how big of a problem market cannibalization will be in the future. This is a game change only a few really understand and has the potential to totally change the current energy market model. My inspiration came after a discussion with one of the leading power market analysts Nordic has to offer. Where ha addressed this problem from a market perspective. The biggest difference between us two was my technical background. As he explained the topic I realized, from a technical perspective, how big of a problem this actually will be. I want to address a topic few are willing to realize but most important, find a solution to the problem. I find this topic extremely fascinating and important. My personal goal is to be the leading power market analyst within renewable energies. So this aria is spot on in terms of motivational background.Renewable energies are critical for achieving net zero emissions, but they have significant drawbacks. With today's renewable energy technologies, it's virtually difficult to establish a sustainable energy infrastructure that doesn't rely on fossil or nuclear fuels (based on the current demand trends). The best part is that there are typically solutions to problems.
Why collaborate with us
The essential factor is my enthusiasm, curiosity, motivation, and academic background in the energy sector. When it comes to understanding the commercial mindset behind energy markets and renewable energies, I consider myself to be far above average. After working in this sector, being a part of the DTU wind turbine auction design committee (price), contributing to the Terrawera foundation, and writing a Bachelor thesis on the green energy transition for the maritime industry, I have gained a thorough awareness of the issues we confront. I know for certain that the result of this thesis will be great and an industry game-changer.
14 to 19 weeks.
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