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Control Power and Variable Renewables A Glimpse at German Data

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  • Hirth, Lion
  • Ziegenhagen, Inka

Abstract

Control power (regulating power, balancing power) is used to quickly restore the supply-demand balance in power systems. Variable renewable energy sources (VRE) such as wind and solar power are often thought to increase the reserve requirement significantly. This paper provides a comprehensive overview of balancing systems in Europe, discusses the role of VRE, and presents empirical market data from Germany. Despite German VRE capacity doubled during the last five years and has surpassed 70% of peak load, contracted control power decreased by 20%, and procurement cost fell by 50%. Today, control power adds only 0.4% to household electricity prices. Nevertheless, we identify several sources of inefficiency in control power markets and imbalance settlement systems and propose a number of policy changes to stimulate the participation of VRE in control provision and to improve the incentives to forecast accurately.

Suggested Citation

  • Hirth, Lion & Ziegenhagen, Inka, 2013. "Control Power and Variable Renewables A Glimpse at German Data," Energy: Resources and Markets 151373, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemer:151373
    DOI: 10.22004/ag.econ.151373
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    Cited by:

    1. Casimir Lorenz & Clemens Gerbaulet, 2014. "New Cross-Border Electricity Balancing Arrangements in Europe," Discussion Papers of DIW Berlin 1400, DIW Berlin, German Institute for Economic Research.
    2. Batalla-Bejerano, Joan & Trujillo-Baute, Elisa, 2016. "Impacts of intermittent renewable generation on electricity system costs," Energy Policy, Elsevier, vol. 94(C), pages 411-420.
    3. Joan Batalla-Bejerano & Elisa Trujillo-Baute, 2015. "Analysing the sensitivity of electricity system operational costs to deviations in supply and demand," Working Papers 2015/8, Institut d'Economia de Barcelona (IEB).
    4. Kondziella, Hendrik & Bruckner, Thomas, 2016. "Flexibility requirements of renewable energy based electricity systems – a review of research results and methodologies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 53(C), pages 10-22.
    5. Xing Luo & Jihong Wang & Jacek D. Wojcik & Jianguo Wang & Decai Li & Mihai Draganescu & Yaowang Li & Shihong Miao, 2018. "Review of Voltage and Frequency Grid Code Specifications for Electrical Energy Storage Applications," Energies, MDPI, vol. 11(5), pages 1-26, April.
    6. Florian Kuhnlenz & Pedro H. J. Nardelli & Santtu Karhinen & Rauli Svento, 2017. "Implementing Flexible Demand: Real-time Price vs. Market Integration," Papers 1709.02667, arXiv.org, revised Feb 2018.
    7. Batalla-Bejerano, Joan & Costa-Campi, Maria Teresa & Trujillo-Baute, Elisa, 2016. "Collateral effects of liberalisation: Metering, losses, load profiles and cost settlement in Spain’s electricity system," Energy Policy, Elsevier, vol. 94(C), pages 421-431.
    8. Ashish Shrestha & Francisco Gonzalez-Longatt, 2021. "Frequency Stability Issues and Research Opportunities in Converter Dominated Power System," Energies, MDPI, vol. 14(14), pages 1-28, July.
    9. Filippo Bovera & Giuliano Rancilio & Davide Falabretti & Marco Merlo, 2021. "Data-Driven Evaluation of Secondary- and Tertiary-Reserve Needs with High Renewables Penetration: The Italian Case," Energies, MDPI, vol. 14(8), pages 1-24, April.
    10. de Jong, Jacques & Hassel, Arndt & Egenhofer, Christian & Jansen, Jaap & Xu, Zheng, 2017. "Improving the Market for Flexibility in the Electricity Sector," CEPS Papers 13093, Centre for European Policy Studies.
    11. Camal, S. & Teng, F. & Michiorri, A. & Kariniotakis, G. & Badesa, L., 2019. "Scenario generation of aggregated Wind, Photovoltaics and small Hydro production for power systems applications," Applied Energy, Elsevier, vol. 242(C), pages 1396-1406.
    12. Guerra, K. & Haro, P. & Gutiérrez, R.E. & Gómez-Barea, A., 2022. "Facing the high share of variable renewable energy in the power system: Flexibility and stability requirements," Applied Energy, Elsevier, vol. 310(C).
    13. Koliou, Elta & Eid, Cherrelle & Chaves-Ávila, José Pablo & Hakvoort, Rudi A., 2014. "Demand response in liberalized electricity markets: Analysis of aggregated load participation in the German balancing mechanism," Energy, Elsevier, vol. 71(C), pages 245-254.
    14. Hirth, Lion & Ueckerdt, Falko, 2013. "Redistribution effects of energy and climate policy: The electricity market," Energy Policy, Elsevier, vol. 62(C), pages 934-947.
    15. Böttger, Diana & Götz, Mario & Theofilidi, Myrto & Bruckner, Thomas, 2015. "Control power provision with power-to-heat plants in systems with high shares of renewable energy sources – An illustrative analysis for Germany based on the use of electric boilers in district heatin," Energy, Elsevier, vol. 82(C), pages 157-167.
    16. Schmidt, Johannes & Eisel, Matthias & Kolbe, Lutz M., 2014. "Assessing the potential of different charging strategies for electric vehicle fleets in closed transport systems," Energy Policy, Elsevier, vol. 74(C), pages 179-189.
    17. Strunz, Sebastian, 2014. "The German energy transition as a regime shift," Ecological Economics, Elsevier, vol. 100(C), pages 150-158.
    18. Malandra, F. & Kizilkale, A.C. & Sirois, F. & Sansò, B. & Anjos, M.F. & Bernier, M. & Gendreau, M. & Malhamé, R.P., 2020. "Smart Distributed Energy Storage Controller (smartDESC)," Energy, Elsevier, vol. 210(C).
    19. Florian Kuhnlenz & Pedro H. J. Nardelli, 2016. "Agent-based Model for Spot and Balancing Electricity Markets," Papers 1612.04512, arXiv.org.
    20. Brijs, Tom & De Vos, Kristof & De Jonghe, Cedric & Belmans, Ronnie, 2015. "Statistical analysis of negative prices in European balancing markets," Renewable Energy, Elsevier, vol. 80(C), pages 53-60.

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    Keywords

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    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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