Hydro-solar seasonal complementarity for optimal hydropower plant expansion in the transitioning Nordic power system

The Nordic power system is rapidly transitioning to accommodate increasing shares of variable renewable energy (VRE) in its generation mix. As such, producers must consider the unpredictability of the future market in investment decisions. This paper investigates the optimal expansion method for expanding an existing hydropower plant located in Norway. Among the possible solutions, the paper focuses on; (1) hybridisation with solar photovoltaics (PV); (2) adding an additional creek inlet to the reservoir; and (3) upgrading the generator capacity. A 5-year dataset of hourly reservoir inflow, reservoir levels, water values, solar irradiance, and market data was used. The results show that the revenues and income potential for each scenario vary greatly with market volatility. The hybrid hydro-PV case gives reliable additional production levels across all years and is most profitable in stable market conditions. The upgraded generation capacity scenario performs badly economically in stable market years but has a high ability to capitalise on extreme price spikes and earn high revenues in volatile market conditions. Both these scenarios outperform the additional creek inlet scenario, which returns the lowest revenues.