You are a PhD student here at the Department of Sociology, Environmental and Business Economics. Can you tell me a bit about your educational background?
I am originally from Hungary and I did a BSc in Business and Management at the Corvinus University of Budapest. I finished my Bachelor studies in 2009. Afterwards I came to Denmark to do my Masters in Environmental and Resource Management at the University of Southern Denmark in Esbjerg.
What made it attractive for you to come to Denmark and study your masters here?
I was looking for an education on a Masters level in Environmental Economics and my wife and I decided to come to Denmark in 2010 to study here, because of the programs the University of Southern Denmark offers.
How did you benefit from doing your Masters here at the University of Southern Denmark in Esbjerg?
I really enjoyed the Master in Environmental and Resource Management, I think I got new perspectives and a new way of thinking in terms of how to apply what you have learned during the classes and how to present yourself and your results.
Back in Hungary the education is more theoretical in a sense that you learn many theoretical approaches; however, they don’t really teach you how to use the theory. It is the opposite in Denmark and I believe it was a really good choice to study here at SDU.
You have started to work as a student assistant in the second year of your Masters. What projects have you worked on as a student assistant?
I worked on a project about the economic analysis of integrating wind power into the Danish power system. I was working together with one of my classmates under the supervision of Niels Vestergaard. The work resulted in a working paper, which we presented to Syd Energi (local electricity distributor company). Actually, this was the reason for starting my PhD later on, since we presented this paper and they realized that integrating energy storage together with wind power can be a useful joined project. My master thesis, which I started before this presentation to Syd Energi, was on energy storage systems, so I already had an interest in analyzing the impacts of integrating storage into the power grid.
What did you do after finishing your Masters?
After finishing my Masters in 2012 I got a position as a research assistant at the department. During the year as a research assistant I finished the economic analysis on integrating the wind power into the Danish power system and I also started to work on analyzing the productivity and efficiency of Danish Biogas power plants together with Niels Vestergaard. This work resulted in an article with the title “Productivity and efficiency measurement of the Danish centralized biogas power sector”, which was published in the Journal Renewable Energy. I was further working with other colleagues on a publication on the economic valuation of extended buffer zones along Danish, rivers, streams and lakes.
After one year working as a research assistant I started my PhD position at the department. As part of the PhD, I was, amongst others, teaching courses in introductory statistics and was teaching exercise classes in advanced environmental and research economics and sustainability. I spent my stay abroad period at the University of Victoria in Canada at the Department of Economics under the supervision of Professor G. Cornelis van Kooten. I attended two graduate courses there and it was a really useful time as I gained experiences in doing research and knowledge about different optimization and econometrics approaches.
What is the main focus of your research at the moment?
The scope of my research is to analyze the economic impact of integrating energy storage into the western Denmark power grid. So, this includes the economic impact on other generators and how storage can support the integration of wind power, since the share of installed wind capacity is the highest in Denmark compared to the rest of the world.
My current research is an empirical study including a comparative analysis on how to minimize the total cost of electricity production, with and without energy storage systems, using a constrained optimization approach. Basically, I am focusing on how storage operates in the power system, what are the impacts in terms of storage operation on the electricity price and also what is the impact on the operation of conventional generators like coal, natural gas and oil power plants.
Going a bit more into detail, can you tell me a bit more about the storage operations?
So, the storage operation is based on intertemporal arbitrage, which means that during off-peak period we store electricity while in on-peak period (i.e. with high demand) electric power is discharged. Off-peak meaning that the electricity consumption is low (e.g. during the night) and in some special cases excess electricity production can also occur, when the supply of wind energy is exceeding the demand. During off-peak period the market price is usually lower, since only low-cost baseload generators are in use, while in on-peak times peak-load power plants operate which have high marginal cost of production.
The general problem we are facing with renewable sources, such as wind and solar, is that the supply is really intermittent, meaning that electricity is generated from these sources only when the source is available. The electricity production from these sources and the demand for the electricity are not highly correlated, while due to the special characteristics of the power market, electricity supply and demand have to be balanced at each point in time. Using electricity storage can be a solution to keep this balance even if the installed capacity of intermittent renewable sources increases.
What are ways to deal with the intermittent nature of renewable energy supply?
There is the problem that on the one hand we have to meet the demand by supply in every second of the day but on the other hand we have really intermittent sources. So we have to somehow balance the demand and the supply.
What we can do is: we can shut down the wind generators on those hours, were we would otherwise have access production, which would mean that there is no green energy produced during that time. Or we can transport the energy to other systems. However, we are then facing the problem that the transport of electricity is really costly due to the fact that there is a high loss during this process but it is doable, as we can see in the increasing amount of interconnector lines to other countries. Another option would be to adapt the demand towards the supply, by using smart grid systems as demand side management “tools”.
The option I am dealing with mostly is the integration of storage systems. Storage systems work in a way that we store electricity at a low cost per unit when we have access production during off-peak periods and we discharge it during on-peak periods.
The other importance of my current work that I would like to highlight is that the model of intertemporal arbitrage I am working with is also focusing on the inflexibility of the conventional power plants, like coal, natural gas etc., meaning that they cannot easily adapt their output level to the changes in the residual load. While we can predict the electricity demand as it has a daily and a weekly pattern, we have a highly fluctuating electricity output from wind, which means that the residual load – which is the electricity consumption that has to be met by conventional generators – also becomes unpredictable. Conventional generators have to meet this residual load, however, they are really inflexible. Through this we are losing and wasting a lot of energy so I am also analyzing how storage systems could support all these conventional generators in the sense that when access electricity is generated, due to the fact that conventional generators are not able to adapt their output level so easily, the energy can be stored. So this is an additional problem that could be solved by electricity storage.
It gets really interesting if we consider the social cost of carbon and how that would impact the operation of electricity storage and the operation of other sources of electricity, which is also part of my research.
Has working in the MERE research group affected your research? Or in other words, do you think you benefit from being part of the research group?
I really enjoy being a part of the department and a part of MERE research group. I really admire the help of all the senior researchers. As the topic I am working on and the field of energy economics is very new, not many of the researchers here at the department have investigated in this area, so it can be a bit challenging. But I do believe that the seminars we are having with the research group are really beneficial for young researchers, since senior researchers are presenting their work as well and we can learn from them about how they are approaching a problem and the methods they use. Also, keeping a daily contact with the senior researchers at MERE and their useful help and advices has helped me to proceed forward with my research.
For more information contact: Viktor Jozsef Racz, racz@sam.sdu.dk