Analysis of Integrated Balancing Markets in Northern Europe under Different Market Design Options

摘要

In an electric power system, the instantaneous balance between demand and supplyudmust always be maintained. Due to the inherent stochasticity of certain typesudof generation sources and demand, as well as contingencies in the power system,udimbalances occur. Hence, corrective actions are required to continuously keep theudsystem in a balanced state. For this, the system needs reserve generation capacityudwith a set of desired technical characteristics such as fast ramp up speed and shortudstartup time. By making use of market mechanisms, the System Operator ensuresudthe availability of enough reserve capacity ahead of time and activates the resourcesudin response to system imbalances in real-time in a setting called balancing market.udAn integrated European electricity market is expected to increase the efficiency,udoverall welfare, competition, and security of supply. With this understanding, theudday-ahead market in Europe has undergone integration efforts with the long-termudgoal of establishing a single European electricity market. Integration of the balancingudmarket is also expected to bring a socio-economic benefit. This is due toudthe sharing of balancing resources and the reduction of required balancing actionsudby netting of imbalances in adjacent areas. However, prior to the realization of audfully integrated balancing market, balancing market variables such as gate closureudtimes, remuneration mechanisms, and the contract periods have to be harmonizedudfirst. This PhD work assumes that these variables are in place in the mathematicaludformulations and the associated results.udThe main objective of this thesis is the modeling of integrated reserve procurementudand balancing energy markets in a setting similar to the current sequential marketudclearance order in Europe. The models are used to analyze the impact of balancingudmarket integration in the current European electricity market settings and allow theudcomparison of different market designs. To assess the impact of balancing marketudintegration, optimization models addressing cross-border reserve procurement andudbalancing energy market integration are developed. The first one is composed ofudthree interdependent blocks: Reserve bidding price determination, reserve procurement,udand day-ahead market clearance. The other one is a formulation for balancingudenergy market. In addition, a methodology for optimal cross-border transmissionudcapacity allocation is developed. The balancing market integration is implementedudin both NTC based and flow-based market coupling settings.udThe following are some of the main results obtained in this PhD work: udUnit based upward and downward bidding prices for reserve provision are audfunction of the difference between the spot price forecasts and a unit’s marginaludcost.ud• The total reserve procurement cost decreases with increased share of reservedudNet Transfer Capacity (NTC), as a result of the possibility of procuring cheaperudcross-border reserves. The day-ahead cost generally increases with increase inudreserved capacity. However, for small shares of reserved transmission capacity,udprocuring reserves from another system reduces the need to keep reserves inudthe expensive system, increasing the flexibility and reducing the day-aheadudcost.ud• Given the possibility of cross-border reserve procurement, more upward reserveudis procured from Norway, Sweden, and the Netherlands. On the other hand,udGermany imports some of its FRR requirement.ud• Using an NTC based methodology to optimally allocate transmission capacityudfor FRR exchange for a planning period of 24 hours, a reduction of EURud26 million (≈ 8 %) in FRR procurement and EUR 53 million in total costsudis obtained compared to the base case of no reservation. This result assertsudthat optimal reservation of NTC for FRR exchange can reduce both FRRudprocurement costs and day-ahead costs simultaneously.ud• For the model with NTC based optimal transmission capacity reservation,udwhere a reservation period of 24 hours has been normally used, sensitivityudanalyses using a 12 hours reservation period showed very significant cost reductions.udThis emphasises the importance of short reservation periods forudreserve procurement.ud• The implicit market clearance option, where the reserve requirement is implicitlyudconsidered as a constraint in the day-ahead market clearance, is generallyuda more efficient market clearance option than the sequential market clearanceudwith optimal transmission capacity reservation. The flexibility due to shortudplanning period and efficiency of the market design option contribute to theudsignificant total cost reduction offered by the implicit market clearance option.udThe flow-based market coupling with implicit market clearance results in totaludcost savings of EUR 413 million compared to the case with no transmission capacityudreservation. On the other hand, flow-based sequential market clearanceudwith optimal transmission reservation gives a saving of EUR 19 million.ud• The possibility of cross-border balancing energy exchange gives cost reductionudbenefits in comparison to local balancing. The decrease in balancing costs isuddue to the netting of imbalances and the use of cheaper balancing energy fromudneighbouring zones. Due to the general improvement in market efficiency,udconsidering the IEEE 30-bus test system, the integrated flow-based balancingudenergy market clearing results in 20 % lower balancing cost compared to theudNTC based approach.