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Increasing the value of wind: From passive to active actors in multiple power markets

Author

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  • Klaus Skytte
  • Lucien Bobo

Abstract

When the share of variable renewable energy, such as wind energy, in the energy system becomes large, the integration cost increases in accordance with the depletion of flexible ramping capabilities of the system. Therefore, integration of large shares of wind power into power system operations calls for market integration as well as for additional flexibility. Among the various available options, wind power plants themselves have the technical potential of offering flexibility. Using the Danish market conditions as a case study, we model and analyze four strategies for the participation of a wind power producer in day‐ahead and real‐time electricity markets, and compare how they affect the value of wind power production. Our findings suggest that wind power plants can have a more solid business case if they are active on both day‐ahead and real‐time power markets, which increases the economic value of wind energy as well as reduces the system integration costs. We also highlight that support schemes can affect the incentives for active participation on real‐time power markets. This type of insight is valuable for wind power's potential to expand its market share while keeping a high economic value in power markets, where the political trend is towards market based deployment of renewables and focus on low system integration costs. This article is categorized under: Wind Power > Systems and Infrastructure Wind Power > Economics and Policy Energy Systems Economics > Economics and Policy Energy Systems Analysis > Economics and Policy

Suggested Citation

  • Klaus Skytte & Lucien Bobo, 2019. "Increasing the value of wind: From passive to active actors in multiple power markets," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 8(3), May.
    • Handle: RePEc:bla:wireae:v:8:y:2019:i:3:n:e328
    DOI: 10.1002/wene.328
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    References listed on IDEAS

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    5. Klaus Skytte, 2006. "Interplay between Environmental Regulation and Power Markets," EUI-RSCAS Working Papers 4, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    6. Hans Ravn & Klaus Skytte, 2000. "Uncertainty in energy-economic modelling of the electrical power sector," Annals of Operations Research, Springer, vol. 97(1), pages 213-229, December.
    7. Söder, Lennart & Lund, Peter D. & Koduvere, Hardi & Bolkesjø, Torjus Folsland & Rossebø, Geir Høyvik & Rosenlund-Soysal, Emilie & Skytte, Klaus & Katz, Jonas & Blumberga, Dagnija, 2018. "A review of demand side flexibility potential in Northern Europe," Renewable and Sustainable Energy Reviews, Elsevier, vol. 91(C), pages 654-664.
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    Citations

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    1. Vivian Sousa & Hugo Algarvio, 2025. "Strategic Bidding to Increase the Market Value of Variable Renewable Generators in Electricity Markets," Energies, MDPI, vol. 18(7), pages 1-22, March.
    2. Hugo Algarvio & António Couto & Ana Estanqueiro, 2024. "RES.Trade: An Open-Access Simulator to Assess the Impact of Different Designs on Balancing Electricity Markets," Energies, MDPI, vol. 17(24), pages 1-18, December.
    3. Peter D. Lund & John Byrne, 2020. "Little time left to reverse emissions—Growing hope despite disappointing CO2 trend," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 9(1), January.
    4. Hugo Algarvio & Vivian Sousa, 2025. "Strategic Bidding to Increase the Market Value of Variable Renewable Generators in New Electricity Market Designs," Energies, MDPI, vol. 18(11), pages 1-18, May.
    5. Hugo Algarvio & António Couto & Fernando Lopes & Ana Estanqueiro, 2019. "Changing the Day-Ahead Gate Closure to Wind Power Integration: A Simulation-Based Study," Energies, MDPI, vol. 12(14), pages 1-20, July.
    6. Hugo Algarvio & Vivian Sousa, 2025. "Strategies to Incentivize the Participation of Variable Renewable Energy Generators in Balancing Markets," Energies, MDPI, vol. 18(11), pages 1-23, May.
    7. Al-Lawati, Razan A.H. & Crespo-Vazquez, Jose L. & Faiz, Tasnim Ibn & Fang, Xin & Noor-E-Alam, Md., 2021. "Two-stage stochastic optimization frameworks to aid in decision-making under uncertainty for variable resource generators participating in a sequential energy market," Applied Energy, Elsevier, vol. 292(C).

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