The demand for electricity is increasing because of efforts to reduce greenhouse gas emissions. Electricity market models can be used to efficiently plan production or study how electricity prices and flows will change in a future grid. In a hydropower dominated electricity system such as the Swedish system, an important aspect of electricity market models is the hydropower modeling. A challenging aspect of modelling hydropower is that plants are interconnected through river systems and thus rely on one another. This results in complex optimization problems, especially in models covering large geographical regions where a detailed hydropower representation is desired. In this study, a detailed hydropower model is implemented in the electricity market model BID3.

The thesis is done in collaboration with the Swedish transmission system operator, Svenska kraftnät (Svk). Svk currently uses a detailed hydropower model in another electricity market model, EMPS. The objectives of the thesis are to transfer the detailed hydropower model from EMPS into BID3. The simulations results are then validated against historical data, EMPS results and an aggregated hydropower model in BID3.

The result is a functioning cascading hydropower model in BID3 which provides relatively accurate results when validated against historical data. However, to use the model, it is necessary to further calibrate the water values as the model tends to save more water in the reservoirs than is needed. There is also a need to further explore model parameters in order to improve the model.