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The Value of Flexibility in Power Markets

Author

Listed:
  • Stéphane Goutte

    (LED - Laboratoire d'Economie Dionysien - UP8 - Université Paris 8)

  • Philippe Vassilopoulos

Abstract

The concept of flexibility is not one you find in standard microeconomics textbooks , yet it already plays a major role in the remuneration of the resources that generate and consume electricity every day and is likely to play an even larger role with the penetration of large intermittent renewable capacities. In this paper we attempt to quantify the net revenues that can be captured by a flexible resource able to react to the short term price variations on the day-ahead and intraday markets in Germany. We find that the difference between day-ahead and intraday revenues for a flexible resource has been increasing (although the profitability has been decreasing on both markets). This difference is more pronounced once 15mn price variations can be captured by a flexible resource. The net revenues from the local 15mn auction (which is held 3 hours after the hourly "coupled" day-ahead auction) are more than eight times higher than the day-ahead hourly auction but

Suggested Citation

  • Stéphane Goutte & Philippe Vassilopoulos, 2019. "The Value of Flexibility in Power Markets," Working Papers hal-01968081, HAL.
    • Handle: RePEc:hal:wpaper:hal-01968081
    Note: View the original document on HAL open archive server: https://hal.science/hal-01968081v1
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C57 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Econometrics of Games and Auctions
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General

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