The EU is committed to decarbonise the economy by 2020 with 3 key objectivesi. A 20% reduction in EU greenhouse gas emissions from 1990 levels; Raising the share of EU energy consumption produced from renewable resources to 20%; A 20% improvement in the EU's energy efficiency. The energy sector can be seen as the main enabler for these objectives. In light of decarbonising the energy sector significant amounts of variable renewable capacity have been installed and more is planned up to 2020 and beyond. This increasing variable capacity increases the need for balancing capabilities in electric power systems to ensure reliable system operation. This is because the output of variable Renewable Energy Sources (RES) is never fully predictable (forecast errors) and has variability that adds to the typical variations in electricity demand. Since RES production generally has feed-in priority, the remaining capacity has to adjust its output to balance total electricity production and demand. Even without this priority, due to zero or very low Marginal Costs, RES production would be first in the merit order.
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