by the European Commission
under the 7th Framework
Today’s electricity markets rely mostly on conventional generation, and, to a much smaller extent, on interruptible loads since such loads are less flexible than generation. Thus, European market rules have so far been developed to deal with the most widely used generation units (nuclear, hydro and thermal power plants). For instance, some block bids used in power exchanges can be understood as reflecting the dynamic constraints of the generating units.
Intermittent generation, based on wind and/or solar power, have specific features which do not fit easily in these current electricity market frameworks. On the one hand, their day-ahead forecasts are significantly less accurate than load forecasts. On the other hand, they are not dispatchable like most of the conventional generation units. Their increasing share in generation portfolios bidding into spot markets sets new challenges for improved market designs, e.g. balancing and congestion management rules: in some instances, congestion and balancing costs might indeed jeopardize the expected benefits of such new generation capacities.
Yet, these new designs change each market player’s behaviour, because of anticipation in unit commitments. Current power system simulations are not really able to reconcile power system balancing and congestion management on a short run as well as market players’ anticipations. And accounting for multi-area zonal European designs makes such analyses even more difficult.
Fortunately, improved regional coordination is growing: the use of bothprovides a new backbone for future market designs. OPTIMATE builds on these concepts to simulate a wide range of market design variants and to compare their economic efficiency in presence of massive intermittent generation capacities. This assessment is able to discriminate benefits per type of portfolios as well as benefits/costs for the whole power system.
Flow-based market coupling is recognised as one of the most promising design approach to foster enhanced regional coordination in Europe. A flow-based model allows for day-ahead market coupling, which in turn helps revealing which branches in the network (across a border or within a country) physically limit cross-border exchanges, i.e. spot market convergence. It is then the clearing process which makes the most efficient allocation of day-ahead cross-border capacities.
for Optimate partners