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Limiting imbalance settlement costs from variable renewable energy sources in the Nordics: Internal balancing vs. balancing market participation

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  • Klyve, Øyvind Sommer
  • Klæboe, Gro
  • Nygård, Magnus Moe
  • Marstein, Erik Stensrud

Abstract

Due to the market gate closures in the Nordic energy markets, producers with variable renewable energy (VRE) assets, e.g., PV and wind power plants, must forecast their production prior to delivery, leaving room for significant forecast errors. These forecast errors can lead to imbalances between the contractual market agreements and physical delivery, which have to be financially accounted for through the imbalance settlement. The increasing shares of VREs in the Nordic energy mix and the increasing variability in the price of regulating the imbalances, can lead to potential large revenue losses for the producers.

Suggested Citation

  • Klyve, Øyvind Sommer & Klæboe, Gro & Nygård, Magnus Moe & Marstein, Erik Stensrud, 2023. "Limiting imbalance settlement costs from variable renewable energy sources in the Nordics: Internal balancing vs. balancing market participation," Applied Energy, Elsevier, vol. 350(C).
    • Handle: RePEc:eee:appene:v:350:y:2023:i:c:s0306261923010607
    DOI: 10.1016/j.apenergy.2023.121696
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    References listed on IDEAS

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