The “German Paradox” in the balancing power markets

Ocker, Fabian; Ehrhart, Karl‐Martin

doi:10.1016/j.rser.2016.09.040

Cited by 96 publications

(65 citation statements)

References 5 publications

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“…Note that the demand for positive aFRR was approximately on the same level during the considered time period from January 2012 until December 2013 (Ocker & Ehrhart, ). Therefore, we assume that suppliers derive their subjective acceptance probability from the corresponding power price interval.…”

Section: Bidder's Decision‐theoretic Calculus For the Austrian And Gementioning

confidence: 98%

“…Ocker et al () provide a game‐theoretic model for the current Austrian and German aFRR auction as well as for the proposed European‐wide aFRR auction. Furthermore, Ocker and Ehrhart () present empirical evidence for collusive behavior in the German balancing power markets, that is, suppliers coordinate on noncompetitive price levels. We relate to the latest literature and present an investigation of the Austrian and German aFRR auctions outcomes in the time span from January 2014 to May 2016.…”

Section: Related Literaturementioning

confidence: 99%

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Bidding strategies in Austrian and German balancing power auctions

Ocker

Ehrhart

Ott³

2018

WIREs Energy & Environment

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Balancing power markets involve complex procurement auction mechanisms that are challenging both to design for auctioneers and to take part in for suppliers. Recent empirical work indicates that auction results from Austria and Germany do not match game-theoretic predictions. Instead, suppliers adjust their bids to previous auctions results and do not reveal their actual costs within their bids. Therefore, this work focuses on bidding strategies of suppliers in the Austrian and German automatically-activated Frequency Restoration Reserve auctions. First, the operating principle of the auctions is analyzed and the cost and profit structures are illustrated. Then, a theoretic approach for the derivation of optimal bidding strategies is presented, that allows the integration of price expectations based on historical market data. We validate our approach by a numerical application of the bidder's calculus. Finally, our theoretic results are confronted with Austrian and German auction outcomes. We find evidence that the identified bidding strategies are applied by the suppliers.

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Section: Bidder's Decision‐theoretic Calculus For the Austrian And Gementioning

confidence: 98%

Section: Related Literaturementioning

confidence: 99%

Bidding strategies in Austrian and German balancing power auctions

Ocker

Ehrhart

Ott³

2018

WIREs Energy & Environment

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“…In February 2016, Spain has become pioneer in this respect, by considering several WPPs participating in BMs (ACCIONA, ; Fernandes, Frías, & Reneses, ). Germany (Hirth & Ziegenhagen, ; Ocker & Ehrhart, ) and Denmark (Jansen, Speckmann, & Baier, ; Sorknaes, Andersen, Tang, & Strøm, ) have also allowed the participation of WPPs in BMs with some restrictions (only for downward mFRR). Skytte and Bobo () conducted a study for the year 2014 where WPPs can participate in the BMs of Denmark, obtaining an increase of 6.5% in the wind energy value.…”

Section: The Internal Market For Electricity: Potential Impact Of Thementioning

confidence: 99%

Effects of regulating the European Internal Market on the integration of variable renewable energy

Algarvio

Lopes

Couto

et al. 2019

WIREs Energy & Environment

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The new proposal for regulating the European Internal Market for Electricity (EIME) can motivate the harmonization of the various National markets. The process of harmonizing the day-ahead markets (DAMs) is at an advanced stage, with an efficiency in the use of interconnectors of 86%. However, the harmonization of both intraday (IDMs) and balancing markets (BMs) is still in its infancy, with an efficiency in the use of interconnectors of 50 and 19%, respectively. The new proposal brings new targets to DAMs, and European countries should make efforts to comply with them. The same is true for IDMs and BMs, but involving more ambitious targets, requiring higher efforts to be accomplished. Both the analysis of the various National markets (according to their compliance with the new proposal for regulating the EIME) and the advantages of the new proposal for key market participants (particularly, consumers, variable renewable generation, and conventional generation) are presented. The analysis indicates that the proposal contributes to a potential increase of the general welfare of market participants. However, some aspects of the proposal can negatively affect the revenue obtained from the National markets, notably for variable renewable generation and conventional generation.

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“…Considering the technical feasibility of the participation of wind power producers in balancing markets, several authors acknowledge this possibility, in case the current market rules and product specifications are adapted (see, e.g., [18][19][20]). In this way, and although with some restrictions, notably the fact that WPPs need to prepare bids aggregated with conventional generation, Spain [18], Germany [19] and Denmark [20] have already allowed the participation of WPPs in BMs (although for downward regulation only).…”

Section: Status Of Some European Countries and Product Analysismentioning

confidence: 99%

Variable Renewable Energy and Market Design: New Products and a Real-World Study

et al. 2019

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Most existing energy markets (EMs) were not designed to take into account an active participation of variable renewable energy (VRE). This situation results typically in imbalances and substantial costs in balancing markets. Such costs are reflected both in the energy and the VRE parts of the consumer tariffs. Both appropriate market products and new elements of market design may largely facilitate the large-scale integration of VRE in EMs. Accordingly, this article presents a new bilateral energy contract and introduces two new marketplaces that can contribute to reduce the imbalances resulting from VRE producers. It also presents a study conducted with the help of an agent-based tool, called MATREM. The results indicate a significant decrease in the imbalances and the associated costs. Energies 2019, 12, 4576 2 of 17To address the issues associated with the participation of VRE producers in markets, adaptations to the current market structure as well as new elements of market design have been proposed by theorists and practitioners working on the area of competitive energy markets. For instance, the International Energy Agency points out that the physical transactions of electrical energy in power systems with high shares of VRE need to be made by considering auctions and centralized pools, and should not take into account feed-in-tariffs or other supporting schemes. The process of trading energy also needs to be improved by defining the terms of the transactions up to 30 min before real-time operation with an interval up to 10 min [6]. This near real-time negotiation is also supported by the Clean Energy Package (Article 7), published by the European Commission [7]. In this package, a new proposal for regulating the Internal Market for Electricity is presented, with the main goals of stimulating the global leadership of Europe in renewables, harmonizing markets rules, supporting the integration of VRE, and increasing the general welfare of consumers (see [8] for a complete overview). Article 6 of the new proposal indicates that market operators should develop new products to accommodate the increasing levels of VRE and support demand-response programs. Now, generally speaking, European markets typically allow bidding up to 5 to 30 min before real-time operation, contributing to reduce the imbalances resulting from VRE producers. The markets of North-America and Australia present some additional flexibility by including 5-min real-time (sub-)markets. Despite this, most real-world markets operate by considering power (MW) and not energy (MWh), thus allowing to some extent substantial deviations of VRE producers.Against this background, this article presents a new bilateral energy contract, called short-term energy (STE) contract, and introduces two new marketplaces that may allow to reduce the imbalances resulting from VRE producers (we note that throughout the article the terms "new marketplace" and "new market product" will be used interchangeably). The main aim is to enable an active and competitive participa...

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The “German Paradox” in the balancing power markets

Cited by 96 publications

References 5 publications

Bidding strategies in Austrian and German balancing power auctions

Bidding strategies in Austrian and German balancing power auctions

Effects of regulating the European Internal Market on the integration of variable renewable energy

Variable Renewable Energy and Market Design: New Products and a Real-World Study

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