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Wind balancing costs in a power system with high wind penetration – Evidence from Portugal

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  • Frade, Pedro M.S.
  • Pereira, João Pedro
  • Santana, J.J.E.
  • Catalão, J.P.S.

Abstract

The growth of intermittent renewable power generation has been drawing attention to the design of balancing markets. Portugal is an interesting case study because wind generation already accounts for a high fraction of demand (23% in 2012–2016), but still there are no economic incentives for efficient wind forecasting (wind balancing costs are passed to end consumers). We analyze the evolution of the balancing market from 2012 to 2016. Using actual market data, we find wind balancing costs around 2 euros per MWh of generated energy. One main reason for these low costs is the existence of a robust transmission grid, which allows for the compensation of positive with negative wind imbalances across the system. Nevertheless, the results suggest that final consumers could save several million euros per year if wind generators were made responsible for the economic cost of their imbalances, in line with other European markets.

Suggested Citation

  • Frade, Pedro M.S. & Pereira, João Pedro & Santana, J.J.E. & Catalão, J.P.S., 2019. "Wind balancing costs in a power system with high wind penetration – Evidence from Portugal," Energy Policy, Elsevier, vol. 132(C), pages 702-713.
    • Handle: RePEc:eee:enepol:v:132:y:2019:i:c:p:702-713
    DOI: 10.1016/j.enpol.2019.06.006
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    References listed on IDEAS

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    2. Qingbin Yu & Yuliang Dong & Yanjun Du & Jiahai Yuan & Fang Fang, 2022. "Optimizing Operation Strategy in a Simulated High-Proportion Wind Power Wind–Coal Combined Base Load Power Generation System under Multiple Scenes," Energies, MDPI, vol. 15(21), pages 1-21, October.
    3. Sirin, Selahattin Murat & Yilmaz, Berna N., 2020. "Variable renewable energy technologies in the Turkish electricity market: Quantile regression analysis of the merit-order effect," Energy Policy, Elsevier, vol. 144(C).
    4. Forbes, Kevin F. & Zampelli, Ernest M., 2020. "Accuracy of wind energy forecasts in Great Britain and prospects for improvement," Utilities Policy, Elsevier, vol. 67(C).

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