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Participation of wind power producers in day-ahead and balancing markets: an overview and a simulation-based study

Publication . Algarvio, Hugo; Lopes, Fernando; Couto, António; Estanqueiro, Ana

ABSTRACT: At present, a harmonized pan-European electricity market (EM) is a close reality. While in day-ahead markets (DAMs) the harmonization is at an advanced stage, in balancing markets (BMs) still exist some challenging issues, notably the remuneration of imbalances: some countries have simple and clear methods, but others consider complex methods that are not appealing to the participation of variable renewable energy (VRE). The participation of VRE in BMs is technically feasible, although with some restrictions to guarantee security and stability. Thus the economic attractiveness of these markets should be increased in order to enable full integration of VRE without feed-in-tariffs or other incentives. This article presents an overview of EMs, focusing on European BMs, and also investigates the benefits of the participation of wind power producers (WPPs) in BMs at both economic and technical levels. In particular, the article presents a new strategy allowing WPPs to bid in BMs. It also presents a study involving four scenarios, where WPPs participate in: (a) the DAM (baseline scenario), (b) the DAM and the automatic-activated frequency restoration reserve market, (c) the DAM and the manually activated FRR (mFRR) market, and (d) the DAM and a 15-min mFRR market. The simulations are performed with the agent-based system MATREM (for Multi-Agent TRading in EMs). For the last scenario, the results indicate an increase around 6% in the wind energy value to the market, a decrease of 12% in the total reserve used, and a decrease around 16% in the costs from the BM. This article is categorized under: Wind Power > Systems and Infrastructure Wind Power > Economics and Policy Energy Systems Analysis > Economics and Policy.

2019Journal article

Open access

Effects of regulating the European Internal Market on the integration of variable renewable energy

Publication . Algarvio, Hugo; Lopes, Fernando; Couto, António; Santana, João; Estanqueiro, Ana

ABSTRACT: The new proposal for regulating the European Internal Market for Electricity (EIME) can motivate the harmonization of the various National markets. The process of harmonizing the day-ahead markets (DAMs) is at an advanced stage, with an efficiency in the use of interconnectors of 86%. However, the harmonization of both intraday (IDMs) and balancing markets (BMs) is still in its infancy, with an efficiency in the use of interconnectors of 50 and 19%, respectively. The new proposal brings new targets to DAMs, and European countries should make efforts to comply with them. The same is true for IDMs and BMs, but involving more ambitious targets, requiring higher efforts to be accomplished. Both the analysis of the various National markets (according to their compliance with the new proposal for regulating the EIME) and the advantages of the new proposal for key market participants (particularly, consumers, variable renewable generation, and conventional generation) are presented. The analysis indicates that the proposal contributes to a potential increase of the general welfare of market participants. However, some aspects of the proposal can negatively affect the revenue obtained from the National markets, notably for variable renewable generation and conventional generation. This article is categorized under: Wind Power > Systems and Infrastructure Energy Policy and Planning > Economics and Policy Energy Systems Analysis > Economics and Policy Energy and Development > Economics and Policy

2019Journal article

Open access

Changing the day-ahead gate closure to wind power integration: a simulation-based study

Publication . Algarvio, Hugo; Couto, António; Lopes, Fernando; Estanqueiro, Ana

ABSTRACT: Currently, in most European electricity markets, power bids are based on forecasts performed 12 to 36 hours ahead. Actual wind power forecast systems still lead to large errors, which may strongly impact electricity market outcomes. Accordingly, this article analyzes the impact of the wind power forecast uncertainty and the change of the day-ahead market gate closure on both the market-clearing prices and the outcomes of the balancing market. To this end, it presents a simulation-based study conducted with the help of an agent-based tool, called MATREM. The results support the following conclusion: a change in the gate closure to a time closer to real-time operation is beneficial to market participants and the energy system generally.

2019Journal article

Open access

Variable renewable energy and market design: new products and a real-world study

Publication . Algarvio, Hugo; Lopes, Fernando; Couto, António; Estanqueiro, Ana; Santana, João

ABSTRACT: Most existing energy markets (EMs) were not designed to take into account an active participation of variable renewable energy (VRE). This situation results typically in imbalances and substantial costs in balancing markets. Such costs are reflected both in the energy and the VRE parts of the consumer tariffs. Both appropriate market products and new elements of market design may largely facilitate the large-scale integration of VRE in EMs. Accordingly, this article presents a new bilateral energy contract and introduces two new marketplaces that can contribute to reduce the imbalances resulting from VRE producers. It also presents a study conducted with the help of an agent-based tool, called MATREM. The results indicate a significant decrease in the imbalances and the associated costs.

2019Journal article

Open access

Integration of renewable energy in markets: analysis of key European and American electricity markets

Publication . Algarvio, Hugo; Lopes, Fernando; Santana, João

ABSTRACT: Electricity markets are systems for affecting the purchase and sale of energy. Most existing markets are built on well-established principles of competition and transparency. However, their designs are based on centralized power plants with a small participation of end-use customers. During the past years, the share of electricity produced by renewable sources increased significantly. This paper analyses the structure and operation of two European markets and two American markets. The analysis highlights that the design, rules and characteristics of most markets are still not completely adapted to power systems with high levels of variable renewable energy. Accordingly, the paper proposes some recommendations to foster the integration of renewable generation.

2019Conference object

Open access