Now or Later? Trading Wind Power Closer to Real-time: How Poorly Designed Subsidies Can Lead to Higher Balancing Costs

Mauritzen, Johannes

doi:10.5547/01956574.36.4.jmau

Cited by 15 publications

(10 citation statements)

References 4 publications

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“…To prevent intermittent renewable generation from threatening the stability of the power system, investments in flexible generation, extensions to the transmission network, integration of adjacent markets, and demand response will be required in the future. Moreover, additional trading opportunities by both producers and large consumers in intraday and balancing markets may be desirable (Mauritzen, 2015). This paper is organised as follows.…”

Section: Introductionmentioning

confidence: 99%

Does renewable energy generation decrease the volatility of electricity prices? An analysis of Denmark and Germany

Rintamäki¹,

Siddiqui

Salo³

2017

Energy Economics

167

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Although variable renewable energy (VRE) technologies with zero marginal costs decrease electricity prices, the literature is inconclusive about how the resulting shift in the supply curves impacts price volatility. Because the flexibility to respond to high peak and low offpeak prices is crucial for demand-response applications and may compensate for the losses of conventional generators caused by lower average prices, there is a need to understand how the penetration of VRE affects volatility. In this paper, we build distributed lag models with Danish and German data to estimate the impact of VRE generation on electricity price volatility. We find that in Denmark wind power decreases the daily volatility of prices by flattening the hourly price profile, but in Germany it increases the volatility because it has a stronger impact on off-peak prices. Our analysis suggests that access to flexible generation capacity and wind power generation patterns contribute to these differing impacts. Meanwhile, solar power decreases price volatility in Germany. By contrast, the weekly volatility of prices increases in both areas due to the intermittency of VRE. Thus, policy measures for facilitating the integration of VRE should be tailored to such region-specific patterns.

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Section: Introductionmentioning

confidence: 99%

Does renewable energy generation decrease the volatility of electricity prices? An analysis of Denmark and Germany

Rintamäki¹,

Siddiqui

Salo³

2017

Energy Economics

167

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“…Doorman and van der Veen (2013) discuss how a common set of rules for balancing markets across Europe could be developed. Mauritzen (2015) points out how poorly designed subsidy regimes for renewable electricity supply (RES) increase balancing costs using Danish data, implying that better integration of RES into the market in the future, could reduce balancing costs. Kunz and Zerrahn (2016) show that congestion management costs in central Europe (Austria, Czech Republic, Germany, Poland, and Slovakia) would fall by over 75% under coordination.…”

Section: Innovationmentioning

confidence: 99%

Competition in Markets for Ancillary Services? The Implications of Rising Distributed Generation

Pollitt¹,

Anaya²

2021

The Energy Journal

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Ancillary services are electricity products which include balancing energy, frequency regulation, voltage support, constraint management and reserves. Traditionally they have been procured by system operators from large conventional power plants, as by-products of the production of energy. This paper discusses the use of markets to procure ancillary services in the face of potentially higher demand for them, caused by rising amounts of intermittent renewable generation. We discuss: the nature of markets for ancillary services; what we really mean by ancillary services; how they are impacted by the rise of distributed generation; how they are currently procured; how they relate to the rest of the electricity system; the current state of evidence on ancillary services markets; whether these markets ever be as competitive as conventional wholesale energy markets, and offer some conclusions.

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“…The following figure shows the evolution of trading volumes between 2009 and 2015. 7 The move to bring increasing iRES capacity additions closer to wholesale power markets and away from feed-in tariffs impose on iRES generators the balancing risks associated with the intermittency of their generation (See Mauritzen, M. (2015) [11]).…”

Section: Forecast Error Of Demandmentioning

confidence: 99%

“…We present an example of a situation that required flexibility: the solar eclipse in Germany 11 . Solar generation for Friday March 20, 2015 was forecasted at 15 GW before the eclipse, falling below 7 GW at 10:30am and rising sharply above 22 GW around noon.…”

Section: An Example Of the Need For Flexibilitymentioning

confidence: 99%

The value of flexibility in power markets

Goutte

Vassilopoulos²

2019

Energy Policy

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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

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Now or Later? Trading Wind Power Closer to Real-time: How Poorly Designed Subsidies Can Lead to Higher Balancing Costs

Cited by 15 publications

References 4 publications

Does renewable energy generation decrease the volatility of electricity prices? An analysis of Denmark and Germany

Does renewable energy generation decrease the volatility of electricity prices? An analysis of Denmark and Germany

Competition in Markets for Ancillary Services? The Implications of Rising Distributed Generation

The value of flexibility in power markets

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