Strategies to Incentivize the Participation of Variable Renewable Energy Generators in Balancing Markets

Algarvio, Hugo; Sousa, Vivian

Publication

Strategies to Incentivize the Participation of Variable Renewable Energy Generators in Balancing Markets

2025-05Journal article

datacite.subject.fos	Engenharia e Tecnologia::Engenharia Eletrotécnica, Eletrónica e Informática
datacite.subject.sdg	07:Energias Renováveis e Acessíveis
datacite.subject.sdg	12:Produção e Consumo Sustentáveis
dc.contributor.author	Algarvio, Hugo
dc.contributor.author	Sousa, Vivian
dc.date.accessioned	2025-07-17T15:57:55Z
dc.date.available	2025-07-17T15:57:55Z
dc.date.issued	2025-05
dc.description.abstract	ABSTRACT: Balancing markets (BMs) play a crucial role in ensuring the real-time equilibrium between electricity demand and supply. The current requirements for participation in BMs often overlook the characteristics and capabilities of variable renewables, limiting their effective integration. The increasing penetration of variable renewables necessitates adjustments in the design of BMs to support the transition toward carbon-neutral power systems. This study examines the levels of active market participation for a wind power producer (WPP) in the Iberian Electricity Market and the Portuguese BMs. In addition to exploring current market dynamics, the study tests one methodology proposed by the Danish Transmission System Operator to support the participation of variable renewables in BMs, the P90, and two new methods based on the full cost balancing concept. These methodologies incentivize WPPs to minimize imbalances by allowing market participation only if imbalances remain within a 10% deadband of annual hours (P90), hourly offers (D90), or both (DP90). The results indicate that participating in the secondary capacity market, particularly for downward capacity, is the most profitable strategy. This participation enhances the value of wind power by over 42%. However, in most methodologies, the WPP failed to deliver nearly 100% of its allocated capacity approximately 1% of the time. In contrast, the D90 approach limited the maximum deviation to 10%, demonstrating the highest reliability among the evaluated methods.	eng
dc.identifier.citation	Algarvio, H. & Sousa, V. (2025). Strategies to Incentivize the Participation of Variable Renewable Energy Generators in Balancing Markets. In: Energies, 2025, vol. 18 (11), article 2800. https://doi.org/10.3390/en18112800
dc.identifier.doi	10.3390/en18112800
dc.identifier.eissn	1996-1073
dc.identifier.uri	http://hdl.handle.net/10400.9/5989
dc.language.iso	eng
dc.peerreviewed	yes
dc.publisher	MDPI
dc.relation	Tools for the Design and modelling of new markets and negotiation mechanisms for a ~100% Renewable European Power Systems
dc.relation.hasversion	https://www.mdpi.com/1996-1073/18/11/2800
dc.rights.uri	http://creativecommons.org/licenses/by/4.0/
dc.subject	Variable renewable energy sources
dc.subject	Energy markets
dc.subject	Balancing markets
dc.subject	Wind power
dc.title	Strategies to Incentivize the Participation of Variable Renewable Energy Generators in Balancing Markets	eng
dc.type	journal article
dspace.entity.type	Publication
oaire.awardTitle	Tools for the Design and modelling of new markets and negotiation mechanisms for a ~100% Renewable European Power Systems
oaire.awardURI	info:eu-repo/grantAgreement/EC/H2020/864276/EU
oaire.citation.issue	11
oaire.citation.title	Energies
oaire.citation.volume	18
oaire.fundingStream	H2020
oaire.version	http://purl.org/coar/version/c_970fb48d4fbd8a85
person.familyName	Algarvio
person.givenName	Hugo
person.identifier.orcid	0000-0002-4129-838X
project.funder.identifier	http://doi.org/10.13039/501100008530
project.funder.name	European Commission
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