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Local Flexibility Market

Author

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  • Peter Cramton

    (University of Cologne and University of Maryland)

Abstract

A local flexibility market is presented that addresses intrazonal congestion in a zonal electricity market. The market lets system operators access flexibility at multiple voltage levels to satisfy transmission constraints. Market participants offer local flexibility intraday in a continuous trading process. This supply is matched with demand from system operators. The market-based redispatch is transparent and technology neutral. Inc-dec gaming is mitigated with features to detect and sanction the behavior. Cost-based redispatch from conventional generation serves as a backstop if additional flexibility is required close to real time. This further mitigates inc-dec gaming by disciplining behavior in the spot market. An advantage of the approach in Europe is that it represents a modest change from the current market and therefore can be implemented sooner and with less risk.

Suggested Citation

  • Peter Cramton, 2022. "Local Flexibility Market," ECONtribute Discussion Papers Series 182, University of Bonn and University of Cologne, Germany.
    • Handle: RePEc:ajk:ajkdps:182
    as

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    File URL: https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_182_2022.pdf
    File Function: First version, 2022
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    References listed on IDEAS

    as
    1. Peter Cramton, 2017. "Electricity market design," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 33(4), pages 589-612.
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    More about this item

    Keywords

    local flexibility; congestion pricing; market design; electricity markets; electricity regulation;
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