IDEAS home Printed from https://ideas.repec.org/a/bla/wireae/v8y2019i5ne343.html
   My bibliography  Save this article

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

Author

Listed:
  • Hugo Algarvio
  • Fernando Lopes
  • António Couto
  • Ana Estanqueiro

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

Suggested Citation

  • Hugo Algarvio & Fernando Lopes & António Couto & Ana Estanqueiro, 2019. "Participation of wind power producers in day‐ahead and balancing markets: An overview and a simulation‐based study," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 8(5), September.
    • Handle: RePEc:bla:wireae:v:8:y:2019:i:5:n:e343
    DOI: 10.1002/wene.343
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/wene.343
    Download Restriction: no
    File URL: https://libkey.io/10.1002/wene.343?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Hansen, Anca D. & Altin, Müfit & Iov, Florin, 2016. "Provision of enhanced ancillary services from wind power plants – Examples and challenges," Renewable Energy, Elsevier, vol. 97(C), pages 8-18.
    2. Banshwar, Anuj & Sharma, Naveen Kumar & Sood, Yog Raj & Shrivastava, Rajnish, 2017. "Market based procurement of energy and ancillary services from Renewable Energy Sources in deregulated environment," Renewable Energy, Elsevier, vol. 101(C), pages 1390-1400.
    3. González-Aparicio, I. & Zucker, A., 2015. "Impact of wind power uncertainty forecasting on the market integration of wind energy in Spain," Applied Energy, Elsevier, vol. 159(C), pages 334-349.
    4. Hannele Holttinen, 2012. "Wind integration: experience, issues, and challenges," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 1(3), pages 243-255, November.
    5. Casimir Lorenz & Clemens Gerbaulet, 2017. "Wind Providing Balancing Reserves: An Application to the German Electricity System of 2025," Discussion Papers of DIW Berlin 1655, DIW Berlin, German Institute for Economic Research.
    6. Fernandes, Camila & Frías, Pablo & Reneses, Javier, 2016. "Participation of intermittent renewable generators in balancing mechanisms: A closer look into the Spanish market design," Renewable Energy, Elsevier, vol. 89(C), pages 305-316.
    7. Hirth, Lion & Ziegenhagen, Inka, 2015. "Balancing power and variable renewables: Three links," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 1035-1051.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hugo Algarvio & Fernando Lopes & António Couto & João Santana & Ana Estanqueiro, 2019. "Effects of regulating the European Internal Market on the integration of variable renewable energy," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 8(6), November.
    2. Couto, António & Estanqueiro, Ana, 2022. "Enhancing wind power forecast accuracy using the weather research and forecasting numerical model-based features and artificial neuronal networks," Renewable Energy, Elsevier, vol. 201(P1), pages 1076-1085.
    3. Hugo Algarvio & Fernando Lopes & António Couto & Ana Estanqueiro & João Santana, 2019. "Variable Renewable Energy and Market Design: New Products and a Real-World Study," Energies, MDPI, vol. 12(23), pages 1-17, November.
    4. Poplavskaya, Ksenia & Lago, Jesus & Strömer, Stefan & de Vries, Laurens, 2021. "Making the most of short-term flexibility in the balancing market: Opportunities and challenges of voluntary bids in the new balancing market design," Energy Policy, Elsevier, vol. 158(C).
    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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sergio Martín‐Martínez & Alberto Lorenzo‐Bonache & Andrés Honrubia‐Escribano & Miguel Cañas‐Carretón & Emilio Gómez‐Lázaro, 2018. "Contribution of wind energy to balancing markets: The case of Spain," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 7(5), September.
    2. Schillinger, Moritz, 2019. "Balancing Market Design and Opportunity Cost - The Swiss Case," Working papers 2019/14, Faculty of Business and Economics - University of Basel.
    3. Angelica, Gianfreda & Lucia, Parisio & Matteo, Pelagatti, 2017. "The RES-induced Switching Effect Across Fossil Fuels: An Analysis of the Italian Day-Ahead and Balancing Prices and Their Connected Costs," Working Papers 360, University of Milano-Bicocca, Department of Economics, revised 03 Feb 2017.
    4. Schillinger, Moritz, 2020. "Balancing-market design and opportunity cost: The Swiss case," Utilities Policy, Elsevier, vol. 64(C).
    5. Lobato, E. & Doenges, K. & Egido, I. & Sigrist, L., 2020. "Limits to wind aggregation: Empirical assessment in the Spanish electricity system," Renewable Energy, Elsevier, vol. 147(P1), pages 1321-1330.
    6. Edmunds, Calum & Martín-Martínez, Sergio & Browell, Jethro & Gómez-Lázaro, Emilio & Galloway, Stuart, 2019. "On the participation of wind energy in response and reserve markets in Great Britain and Spain," Renewable and Sustainable Energy Reviews, Elsevier, vol. 115(C).
    7. Fabian Ocker & Karl‐Martin Ehrhart & Marion Ott, 2018. "Bidding strategies in Austrian and German balancing power auctions," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 7(6), November.
    8. Gianfreda, Angelica & Parisio, Lucia & Pelagatti, Matteo, 2018. "A review of balancing costs in Italy before and after RES introduction," Renewable and Sustainable Energy Reviews, Elsevier, vol. 91(C), pages 549-563.
    9. Brijs, Tom & De Jonghe, Cedric & Hobbs, Benjamin F. & Belmans, Ronnie, 2017. "Interactions between the design of short-term electricity markets in the CWE region and power system flexibility," Applied Energy, Elsevier, vol. 195(C), pages 36-51.
    10. Hu, Jing & Harmsen, Robert & Crijns-Graus, Wina & Worrell, Ernst & van den Broek, Machteld, 2018. "Identifying barriers to large-scale integration of variable renewable electricity into the electricity market: A literature review of market design," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P2), pages 2181-2195.
    11. Ming, Bo & Liu, Pan & Guo, Shenglian & Zhang, Xiaoqi & Feng, Maoyuan & Wang, Xianxun, 2017. "Optimizing utility-scale photovoltaic power generation for integration into a hydropower reservoir by incorporating long- and short-term operational decisions," Applied Energy, Elsevier, vol. 204(C), pages 432-445.
    12. Schillinger, Moritz & Weigt, Hannes, 2019. "Bidding into balancing markets in a hydro-dominated electricity system," Working papers 2019/13, Faculty of Business and Economics - University of Basel.
    13. Abiodun, Kehinde & Hood, Karoline & Cox, John L. & Newman, Alexandra M. & Zolan, Alex J., 2023. "The value of concentrating solar power in ancillary services markets," Applied Energy, Elsevier, vol. 334(C).
    14. Joos, Michael & Staffell, Iain, 2018. "Short-term integration costs of variable renewable energy: Wind curtailment and balancing in Britain and Germany," Renewable and Sustainable Energy Reviews, Elsevier, vol. 86(C), pages 45-65.
    15. Hirth, Lion, 2016. "The benefits of flexibility: The value of wind energy with hydropower," Applied Energy, Elsevier, vol. 181(C), pages 210-223.
    16. Hugo Algarvio & Fernando Lopes & António Couto & João Santana & Ana Estanqueiro, 2019. "Effects of regulating the European Internal Market on the integration of variable renewable energy," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 8(6), November.
    17. Jethro Browell, 2018. "Risk Constrained Trading Strategies for Stochastic Generation with a Single-Price Balancing Market," Energies, MDPI, vol. 11(6), pages 1-17, May.
    18. Eicke, Anselm & Ruhnau, Oliver & Hirth, Lion, 2021. "Electricity balancing as a market equilibrium," EconStor Preprints 233852, ZBW - Leibniz Information Centre for Economics.
    19. Kim, James Hyungkwan & Kahrl, Fredrich & Mills, Andrew & Wiser, Ryan & Montañés, Cristina Crespo & Gorman, Will, 2023. "Economic evaluation of variable renewable energy participation in U.S. ancillary services markets," Utilities Policy, Elsevier, vol. 82(C).
    20. Gaudard, Ludovic & Madani, Kaveh, 2019. "Energy storage race: Has the monopoly of pumped-storage in Europe come to an end?," Energy Policy, Elsevier, vol. 126(C), pages 22-29.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:wireae:v:8:y:2019:i:5:n:e343. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=2041-8396 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.