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Ramping ancillary service for cost-based electricity markets with high penetration of variable renewable energy

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  • Godoy-González, Diego
  • Gil, Esteban
  • Gutiérrez-Alcaraz, Guillermo

Abstract

System operators and electricity market stakeholders are facing new challenges related to increasing variability in both generation and demand. Rising generation levels of variable renewable energy (VRE) sources cause fluctuations in net loads that need to be met in real time by the rest of the system resources. While in some bid-based markets ancillary services have been proposed to procure ramping in an economic and efficient way, cost-based markets are struggling to define products and mechanisms that can accommodate to their rules, so as to incentivize and properly remunerate their procurement. In this paper we conceptualize a ramping ancillary service (RAS) for cost-based electricity markets with high penetration of VRE. The proposed RAS scheme is evaluated through simulations of the Chilean electric system. Numerical results show that it can be implemented in cost-based markets with positive technical and economic results, and that it may be a suitable solution to alleviate net load changes caused by high penetration of VRE.

Suggested Citation

  • Godoy-González, Diego & Gil, Esteban & Gutiérrez-Alcaraz, Guillermo, 2020. "Ramping ancillary service for cost-based electricity markets with high penetration of variable renewable energy," Energy Economics, Elsevier, vol. 85(C).
    • Handle: RePEc:eee:eneeco:v:85:y:2020:i:c:s0140988319303512
    DOI: 10.1016/j.eneco.2019.104556
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    Cited by:

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    More about this item

    Keywords

    Ancillary services; Ramping; Uncertainty modeling; Electricity markets; Flexibility; Variable renewable energy; Market design;
    All these keywords.

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • C00 - Mathematical and Quantitative Methods - - General - - - General

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