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Second-generation biofuel is regarded as a sustainable alternatives to fossil energy in transportation where electricity is not feasible. The main purpose of this study is to analyze how large-scale second-generation biofuel based on wood may affect the competitiveness of more mature bioenergy technologies such as bioheat through competition in the biomass market. The impacts on forest industries are also included.

An economic model for the energy and forest sectors based on partial equilibrium modeling is used to quantify the impacts of four different locations of biofuel production in Norway.

The results show that there are regional variations in biomass price effects depending on local raw material availability and costs of transport and import. Technologies allowing for a larger variety of wood biomass qualities will face lower biomass prices than technologies using only one species as raw material, causing less reduction in the production of bioheat and forest industrial products. For Norway specifically, the paper concludes that even if there is a potential for both increased bioheat generation and large-scale biofuel production, the production of second-generation biofuels based on domestic wood resources will cause a 5-20 percent reduction in bioheat generation depending on the scale of biofuel production.

This study demonstrates how impacts on biomass markets from establishment of biofuel production vary quite substantially with location, production level and choice of feedstock. One main finding is the quite large biomass cost impact that is seen in the model runs when introducing large-scale biofuel production. Increased biomass costs reduce the profitability and this must be taken into account when establishing a biofuel installation.

The originality of the paper is the analyses of biofuel impacts with a detailed model for biomass supply as the bioenergy and forest sectors.

This study aims to investigate the effects of thermal–hydro interconnection on the revenues, market value and curtailment of variable renewable energy (VRE). The increasing market shares of VRE sources in the Northern European power system cause declining revenues for VRE producers, because of the merit-order effect. A sparsely studied flexibility measure for mitigating the drop in the VRE market value is increased interconnection between thermal- and hydropower-dominated regions.

A comprehensive partial equilibrium model with a high spatial and temporal resolution is applied for the analysis.

Model simulation results for 2030 show that thermal–hydro interconnection will cause exchange patterns that to a larger extent follow VRE production patterns, causing significantly reduced VRE curtailment. Wind value factors are found to decrease in the hydropower-dominated regions and increase in thermal power-dominated regions. Because of increased average electricity prices in most regions, the revenues are, however, found to increase for all VRE technologies. By only assuming the planned increases in transmission capacity, total VRE revenues are found to increase by 3.3 per cent and VRE electricity generation increases by 3.7 TWh.

The current study is, to the authors' knowledge, the first to analyze the effect of interconnection between thermal- and hydropower-dominated regions on the VRE market value, and the authors conclude that this is a promising flexibility measure for mitigating the value-drop of VRE caused by the merit-order effect. The study results demonstrate the importance of taking the whole power system into consideration when planning future transmission capacity expansions.

The purpose of this study is to analyze the power market and greenhouse gas (GHG) emission effects of the joint Norwegian–Swedish tradable green certificates (TGCs) market, which is established to support investments according to a 26.4 TWh increased annual renewable electricity generation (REG) by 2020.

The study applies an energy system model with high granularity in time and space, and detailed power system data for the Nordic countries, Germany, The Netherlands and UK.

The results show that the TGC scheme will cause a 8.7-9.3 /MWh reduction in average electricity prices in the Nordic countries. The price decrease will to a limited extent pass through to Germany, The Netherlands and UK. When assuming a low carbon price level, the new REG will reduce annual GHG emissions by 10.9 Mtonnes in 2020, primarily through substitution of German natural gas power. A sensitivity analysis shows that the GHG emission effect of the TGCs is highly sensitive to changes in the carbon price. Investment levels up to a 90 TWh increased REG per year are found to cause increasing GHG emission reductions.

The study results signal the importance of taking the TGC policy into account in decision-making processes in the Northern European power system, in particular for market actors in the Nordic area. The authors conclude that the Nordic countries potentially can play a vital role in a future Northern European low carbon power system through export of green balancing power, substitution of thermal power and reduced GHG emissions from the Northern European power sector.