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Impact of the integration of operating constraints of thermal generation assets in electricity market models

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  • Cogen, Florent
  • Dussartre, Virginie
  • Little, Emily
  • Roques, Fabien

Abstract

Balancing energy markets are currently being implemented in the European power system, progressively replacing historical balancing processes that were designed at a local scale. Occurring within the last hour before real-time, these markets are consequently subject to specific constraints. Among these, operating constraints applied to generation and consumption units heavily conflict with the order formulation process of market actors. This paper curates a list of operating constraints–particularly related to thermal units–relevant to the balancing time frame, before highlighting the incomplete inclusion of these constraints in common energy market models. It then proposes a modeling approach that incorporates them in the electricity market agent-based model ATLAS, and demonstrates the impact of each one through a case study on the 2030 European power system. Results show that modeling operating constraints leads to a significant decrease of market liquidity (up to 60%), and to subsequent impacts on market performances (notably a 114% increase in balancing costs and a doubling of the volume of unsupplied Transmission System Operator balancing demand). This advocates for the relevance of the inclusion of these constraints in balancing market models, and puts into perspective results obtained without them.

Suggested Citation

  • Cogen, Florent & Dussartre, Virginie & Little, Emily & Roques, Fabien, 2025. "Impact of the integration of operating constraints of thermal generation assets in electricity market models," Energy Economics, Elsevier, vol. 148(C).
    • Handle: RePEc:eee:eneeco:v:148:y:2025:i:c:s014098832500413x
    DOI: 10.1016/j.eneco.2025.108589
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    References listed on IDEAS

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    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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