Power Market Operations and System Reliability

Summary

A contribution to the market design debate in the Pentalateral Energy Forum

Der Ausbau Erneuerbarer Energien in Europa erhöht die Anforderungen an die Flexibilität des Stromsystems. Während früher große, zentrale Kraftwerke ihre Stromerzeugung kontinuierlich an die Nachfrage angepasst haben, geht es heute darum, das Stromangebot und die Stromnachfrage mit einer Vielzahl von Stellschrauben in Einklang zu bringen. Das ist eine wesentliche Voraussetzung dafür, das hohe Maß an Versorgungssicherheit mit Strom auch künftig zu gewährleisten.

Wie effizient sich Versorgungssicherheit herstellen lässt, hängt wesentlich vom Design der Strommärkte ab. Daher befasst sich das Papier mit den Ausgestaltungsmöglichkeiten von Day-Ahead und Intraday-Märkten sowie von Märkten für Regelenergie und von Kapazitätsmärkten im geographischen Kontext des Pentalateralen Energieforums. Dabei werden die technischen Flexibilitätsanforderungen zukünftiger Stromsysteme berücksichtigt.


Core results

  1. Resource adequacy is not only about “how much?”, but also about “what kind?”.

    The power system of the future will require a mix of flexible resources in order to efficiently address resource adequacy. On the supply side, more peak and mid-merit plants and fewer inflexible baseload plants will be needed. In addition, the activation of flexibility potential on the demand side will be crucial.

  2. Resource adequacy should be assessed on a regional level.

    Regional resource adequacy assessments lower the costs of achieving a reliable power system and mitigate the need for flexibility. For a given resource adequacy standard, the quantity of required resources decreases and the options for balancing the system expand as the market size increases.

  3. A reformed energy-only market is a no-regret option.

    Making the energy-only market faster and larger is crucial to meeting the flexibility challenge. Further integrating short-term markets across borders as well as vertically linking the different segments (day-ahead, intraday and balancing markets) can help to reduce flexibility requirements. This will also allow markets to better reflect the real-time value of energy and balancing resources.

  4. If resource adequacy is addressed through a capacity mechanism, resource capability rather than capacity needs to be the primary focus.

    Security of supply will increasingly become a dynamic issue. Future capacity mechanisms will need to consider this by focussing not just on capacity in a quantitative sense but also on operational capabilities. This will minimise price spillover effects of capacity mechanisms to energy-only markets while also fostering greater reliability at lower costs.

Bibliographical Data

Authors

Michael Hogan, Frederick Weston

Publication number

058/08-I-2014/EN

Version number

1

Release date

12/2014

Number of pages

36

Citation

RAP (2014): Power Market Operations and System Reliability: A contribution to the market design debate in the Pentalateral Energy Forum. Study on behalf of Agora Energiewende.