Power market design choices with high shares of intermittent renewables

Decision strategies in sequential power markets with renewable energy

“…With long run marginal costs for non-intermittent generation units typically above their short run marginal costs (Blazquez et al, 2020), we believe the qualitative experimental finding of non-intermittent producers moving focus from forward to spot markets would be robust to such extensions. 15 With the increase of intermittent renewable energy sources it is expected that the balancing market will become the main reference spot market (Kuepper, 2020). The balancing market price corresponds to the true spot price, as system operators match supply and demand subject to real-time system constraints.…”

“…Indeed, in the context of electricity markets with increasing uncertainty driven by a growing share of intermittent renewable energy production, risk-sharing close to delivery becomes more important and short-term financial instruments, like intraday and continuous trading, gain liquidity(Knaut and Paschmann, 2017). It is furthermore expected that in power markets with high shares of intermittent renewable energy sources, rather than the day-ahead or intraday market, the real-time balancing market will become the reference market in the future, as it corresponds to the true electricity spot market(Kuepper, 2020). In this paper, we therefore consider the latter as the actual spot market.4 For the purpose of this paper, there is no need to focus on the differences between futures and forward contracts.…”