Nach oben pdf The German market for system reserve capacity and balancing energy

The German market for system reserve capacity and balancing energy

The German market for system reserve capacity and balancing energy

Tertiary control exists mainly for economic reasons. It restores und supports the faster responding secondary reserves. Tertiary reserves are usually activated automatically via re- scheduling by the TSO and should be fully available 15 minutes after activation. They are supposed to cover larger, more lasting imbalances at lower costs than secondary reserves. When the frequency drops are too severe and the three load-frequency controls cannot react sufficiently, load shedding is used as a last resort. If the system frequency reaches 49.5Hz, pump loads of pumped-storage plants are automatically shed (see UCTE, 2007). Customer load is started to be shed automatically at a system frequency level of 49Hz, with further thresholds
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Bidding strategies in Austrian and German balancing power auctions

Bidding strategies in Austrian and German balancing power auctions

Advanced Review Abstract 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 historic 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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The European Emissions Trading System and the German and Polish Electricity Market

The European Emissions Trading System and the German and Polish Electricity Market

In the RTM all large generating units are required to bid their entire capacity together with prices. The market opens at 9:00 the day before delivery and closes at 14:30 (Siewierski, 2015). Besides large generating units which are required to participate in the RTM, flexible loads are allowed to bid load reduction. For load reduction bids, the market also opens at 9:30 but closes one and a half hours before delivery time. The latest gate closure is at 21:30 at the delivery day. PSE uses RTM bids to balance unforeseen deviation from the day-ahead production schedule. All units are rewarded a uniform price for the delivery of energy. The same price is charged if units are not able to deliver the energy contracted. Therefore, the RTM is revenue neutral for the PSE. The combination of a DAM and an RTM used for balancing offers the possibility of market manipulation. For example, the generators could withdraw capacity from the DAM in order to increase prices in the RTM. In order to avoid such behavior, PSE is allowed to introduce differentiated prices in the case of excessively high balancing quantities or prices. Comparison and Summary
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Bidding strategies in Austrian and German balancing power auctions

Bidding strategies in Austrian and German balancing power auctions

Advanced Review Abstract 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 historic 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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AN AGENT-BASED SIMULATION MODEL FOR THE ANALYSIS OF MARKET INTEGRATION OF RENEWABLE ENERGY FOR THE GERMAN ELECTRICITY MARKET

AN AGENT-BASED SIMULATION MODEL FOR THE ANALYSIS OF MARKET INTEGRATION OF RENEWABLE ENERGY FOR THE GERMAN ELECTRICITY MARKET

To further ensure a successful integration of renewable energies, technical, financial and organizational aspects of the electricity system have to be redesigned. A main challenge lies in the alignment of generation and demand of energy due to the fluctuating character of renewables. Several possibilities are being discussed to align this imbalance. One possibility is the market integration of renewables by linking the generation of renewable electricity to the price signals of the energy exchange markets. In the year 2012 the German government introduced the market premium for supporting the direct marketing of electricity from renewable energies. The AMIRIS agent-based simulation model allows testing and analysing the impacts of the market premium on the involved market actors (e.g. renewable power plant operators and direct marketers) on the micro level as well as effects on the macro level (energy exchange prices and market structure) of the energy market system.
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Wind providing balancing reserves: An application to the German electricity system of 2025

Wind providing balancing reserves: An application to the German electricity system of 2025

(b) Tertiary Capacity Figure 3: Balancing reserve activation duration curves of 2013. Source: own depiction. in-feed forecast could decrease balancing demand. On the other hand the reserve sizing mechanism influences the amount reserved substantially. With a static reserves sizing horizon, the amount of reserves is determined on a regular (e.g. quarterly) basis, whereas a dynamic reserves sizing horizon takes short term influences on the system such as renewable availability into account, possibly leading to a decreased reserves size. Breuer et al. (2013), Bucksteeg et al. (2016), and dena (2014) compare static and dynamic reserves sizing methods for future German balancing reserves and anticipate higher shares of renewable in-feed. The authors show that in case of dynamic reserves sizing the amount of required reserves only increases slightly compared to today’s values. If static sizing was continued until 2030, where the amount of renewables is substantially higher than today, stronger increases up to a doubling of required reserves is estimated. Van den Bergh et al. (2016) develop a reserves sizing method in the context of cooperation between market zones, but conclude that the cost minimal approach is uncoordinated sizing, with joined activation across zones. Since most studies assume that until high shares of RES are reached, no significant influence on the balancing demand will be seen if dynamic reserves sizing is in place, and not to distort the results, we assume the same level of reserve demand for 2025 as for 2013.
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Balancing and intraday market design: Options for wind integration

Balancing and intraday market design: Options for wind integration

EU Member States increase deployment of intermittent renewable energy sources to deliver the 20% renewable target formulated in the European Renewables Directive of 2008. To incorporate these intermittent sources, a power market needs to be flexible enough to accommodate short-term forecasts and quick turn transactions. This flexibility is particularly valuable with respect to wind energy, where wind forecast uncertainty decreases significantly in the final 24 hours before actual generation. Therefore, current designs of intraday and balancing markets need to be altered to make full use of the flexibility of the transmission system and the different generation technologies to effectively respond to increased uncertainty. This paper explores the current power market designs in European countries and North America and assesses these designs against criteria that evaluate whether they are able to adequately handle wind intermittency.
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Regularization Approach for Network Modeling of German Energy Market

Regularization Approach for Network Modeling of German Energy Market

1 I NTRODUCTION Affordable and reliable energy supply is essential for industrial growth. Achieving these in times of growing demand, raw materials shortage and climate change poses challenges. It is therefore essential to provide precise forecast for future power supply. Germany’s power system for the industry and the consumers is undergoing radical change. At present, con- ventional energy sources generate approximately 74% of Germany’s electricity. However, the ongoing expansion of renewable energy and the phase-out of nuclear energy for power generation will change the composition of the electricity mix, which in return, will generate pricing signals affecting the electricity trading. Therefore a study on the electricity deriva- tive market, e.g. the forward market can provide a hedge against such risks. Based on such insights, energy companies may invest in both electricity spot and derivatives mar- kets. However, the number of variables and relevant factors is typically huge. A properly designed subset selection must be employed to pick the most informative power contracts to representing energy market risk.
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Strategic capacity withholding through failures in the German-Austrian electricity market

Strategic capacity withholding through failures in the German-Austrian electricity market

Although the application of the algorithm was eventually able to identify a limited amount of unutilized capacity, the authority concluded that “… the non-operation of profitable power plants identified in the present inquiry is too limited to initiate specific abuse proceedings with respect to the period examined” (Federal Cartel Office (2011), p. 13). In particular, the following alternative explanations for the observed amount of unutilized capacity were mentioned: (1) intraday market trading activities, (2) the general uncertainty operators face when optimizing generation capacity (which cannot be taken into account as part of the retrospective assessment done by the authority), (3) the development of more complex bidding strategies, and (4) remaining technical restrictions (beyond the ones already excluded in the beginning of the analysis). In sum, the impossibility to differentiate clearly between (anti-competitive) capacity withholding behavior and other types of (pro-competitive) behavior in the observed market conduct foreclosed the initiation of abuse proceedings against the large energy providers (see also Swider et al. (2007) for a general discussion of the challenges of empirically identifying capacity withholding strategies in real markets).
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Tender frequency and market concentration in balancing power markets

Tender frequency and market concentration in balancing power markets

The German expenses for the provision of primary and secondary balancing power was EUR 331m in 2014 (Bundesnetzagentur, 2016) corresponding to average expenses of EUR 6.37m per week. 19 This means that the average real expenses were higher than the simulated costs for the balancing power market with the weekly market design (EUR 1.328m in the winter and EUR 0.677m in the summer). Our model calculates total costs for power plants to provide balancing power under perfect competition and foresight. Those can be interpreted as a lower bound for producers’ costs for the balancing power provision. The Bundesnetza- gentur publishes the total expenditures for the balancing power provision. These expenditures also include producers’ surplus. If every operator would bid their real costs in the pay-as-bid auction (under perfect fore- sight and perfect information), both results should be the same. However, since it is profit maximizing for the operators to estimate and bid the system marginal costs instead of own marginal costs (see for instance Müsgens et al. (2014)), the real expenditures are higher than the modeled costs for provision. Furthermore, 19 This figure is calculated based on capacity bids, not energy bids. This is consistent with our modeling approach in which
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Electricity balancing as a market equilibrium: Estimating supply and demand of imbalance energy

Electricity balancing as a market equilibrium: Estimating supply and demand of imbalance energy

German imbalance system. This yields quantitative insights on the behavior of balancing responsible parties. However, a few shortcomings are worth noting. First, we assume linear supply and demand curves. While this is certainly a strong simplification, we deem it acceptable for the comparatively high imbalances we analyze. Second, the econometric model aims at analyzing overarching trends, and performs relatively poor when forecasting imbalances in specific hours. This is due to changes in the levels of explanatory variables throughout the analyzed period. A trade-off is that longer periods of investigation increase the validity of the model due to the higher number of observations while shorter time periods imply smaller changes in the level of parameters. Third, to satisfy the exclusion restriction, we exclude a significant amount of observations, mainly with small system imbalances. Technically, our results thus only hold for quarter hours in which the system is significantly short or significantly long, but we argue that these are the most relevant ones for system stability.
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The Legal and Economic Case for an Auction Reserve Price in the EU Emissions Trading System

The Legal and Economic Case for an Auction Reserve Price in the EU Emissions Trading System

In addition to the principle of conferral, the EU’s ability to legislate is also defined by certain other principles, primarily those of subsidiarity and proportionality. The function of the subsidiarity principle is to ensure that decisions are taken as closely to the citizen as possible; the EU does not take action unless it is more efficient than action at the national, regional or local level. The subsidiarity principle therefor sets limits as to when the Union may use its competence in areas, such as environmental and energy policy, where it shares legislative power with the Member States (see further Section 3.2). Two conditions must be met for the Union to legislate in such areas: that the objectives of a proposed action cannot be sufficiently achieved by the Member States, and that these objectives can, because of their scale and effects, be better achieved at Union level (Article 5.3 TEU). Subsidiarity is seldom an obstacle to EU action in the field of environment: the scope for benefits from concerted EU action is clear, either because of the transboundary nature of the problem or because of the negative effects for the internal market of measures taken
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The European Emissions Trading System (EU ETS): Ex-Post Analysis, the Market Stability Reserve and Options for a Comprehensive Reform

The European Emissions Trading System (EU ETS): Ex-Post Analysis, the Market Stability Reserve and Options for a Comprehensive Reform

national mitigation policies in order to achieve their more ambitious domestic mitigation goals. However, reliance on domestic policy instruments would create an inefficient pattern of regulation across the EU and would add to the factors working towards reducing the EUA price. The EU ETS is embedded in a multi-level governance structure, with Member States having diverging preferences over their technology mix and level of climate policy ambition. The EU ETS is not the only instrument for climate and energy policy, but based on the national sovereignty of the energy mix, Member States can implement additional measures, such as renewable support schemes, energy efficiency measures, or additional domestic carbon prices (UK) that interact with the EU ETS. This is likely to intensify asymmetries in marginal abatement costs across Member States and thus increase overall policy cost. In addition, these policies also do only reallocate but not on net reduce emissions and can add to an even stronger reduction of the EUA price by exogenously reducing the allowance demand through channels identified in section 2.2, thus intensifying the problems of the EU ETS. At the same time, given the differences in envisaged levels and timing of climate policy targets across Member States, the question arises as to whether the EU ETS can be adjusted to help guide these divergent national preferences towards mutually beneficial outcomes. These points are revisited in the discussion of reform options in the next sections.
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Optimization of spatial balancing and storage needs for large-scale power system integration of fluctuating solar energy

Optimization of spatial balancing and storage needs for large-scale power system integration of fluctuating solar energy

systematic variability of PV with no generation at night and the seemingly opposite behavior to the annual load curve require seasonal storage to be filled in from the peak electricity generation periods. This effect is of particular importance in power systems with high shares of solar PV. In Chapter. 5, the minimum storage capacity requirement is calculated to maintain a stable grid without introducing any additional balancing. The corresponding discussion also covers the issues of optimal mix of PV and wind that can minimize the balancing needs. Heide et al. [33] have concluded that the seasonal optimal mix is 55% wind and 45% solar in a 100% solar and wind based scenario. This choice of integrating higher wind shares arrives due to its greater correlation with the demand profile than solar variations. It is to be noted here that seasonal load curve has a much weaker profile than does wind and further addition of wind power into the grid will result in much over-production in winter and under-production in summer. With the optimal mix of solar PV and wind, and using adequate storages, one can reduce the operational filling factors of the dispatchable power plants that require energy and time to ramp up and down and can improve the economic model of these facilities.
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Short-term electricity trading for system balancing: An empirical analysis of the role of intraday trading in balancing Germany's electricity system

Short-term electricity trading for system balancing: An empirical analysis of the role of intraday trading in balancing Germany's electricity system

The empirical work of Hirth and Ziegenhagen [9], however, has challenged this conventional wisdom. Specifically, they showed that the assumption of “holding everything else fixed” is quite different from the reality of an electricity system that undergoes rapid changes. They showed empirically that Germany’s renewable energy expansion has been accompanied by a significant reduction in balancing reserves, an observation dubbed theGerman Balancing Paradox”. Of course, it is not claimed that larger wind and solar capacity caused reserves to decline. Rather, changes to processes, technology, market design and incentives – some of them possibly driven by the renewables – led to a transformation of the energy system, while others – likely exogenous – have caused a decline in balancing reserves despite the boom in renewables.
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Cross-border exchange and sharing of generation reserve capacity

Cross-border exchange and sharing of generation reserve capacity

The benefits of cross-border cooperation of reserves have already been studied in the literature. Most of the literature presents case study results. Vandezande et al. (2009) estimate that a Belgium-Netherlands balancing market would have decreased procurement and activation costs by 29-44% in 2008, depending on the availability of cross-border capacity. Likewise, Van den Bergh et al. (2017) estimate the benefits of cross-border activation of reserves to be around e25 million a year for a case study of the 2013 Central Western European electricity system (Belgium, France, Germany and the Netherlands). However, they find lower benefits of coop- eration if transmission constraints are neglected during cross-border procurement. Farahmand et al. (2012) study the integration of the balancing and procurement markets of Northern Europe, Germany and the Netherlands. They estimate savings of approximately e204 million per year for exchange of balancing energy and e153 million per year for exchange of reserve capacity. This last number is in line with our estimation of e160 million per year for exchange between Belgium, France, Germany, the Netherlands, Portugal and Spain. Gebrekiros et al. (2013) find only
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The right way to reform the EU emissions trading system: Alternatives to the market stability reserve

The right way to reform the EU emissions trading system: Alternatives to the market stability reserve

8, 2 01 5 6 | 16 Another possible cause is the strong production of green energy in Europe. The commis- sion as well as single EU members have formulated goals for renewable energy and have introduced suitable development systems having a regulatory function that overlaps with the emission trade. For example, the fixed energy feed-in tariffs for renewable energy technologies in Germany and the production of CO 2 -free green energy made possible by those tariffs both lead to a reduced demand for emission allowances in the German energy sector. The price for allowances goes down, so that market participants of other sectors or countries can secure the allowances more cost effectively than they could in a situation in which less green energy was produced. Because of the coexistence with emission trading, the promotion of renewable energies merely relocates emissions, it does not avoid them (BMWA 2004).
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Optimization of dimension and operation strategy for a wind-battery energy system in German electricity market under consideration of battery ageing process

Optimization of dimension and operation strategy for a wind-battery energy system in German electricity market under consideration of battery ageing process

1.2.3 Applications in the field of energy market All the applications above were discussed mainly from a technical view, in order to find the probabilities how to support the integration of wind energy in a future power system. The key point in this thesis is to discuss the probability to support the integration of wind energy from an economical view. More and more wind energy will be marketed directly in German energy market. Due to the fluctuation wind energy has to be forecasted, so that a fixed forecasted volume is sold in the spot market. Although the forecasting skill was improved and more exact forecast can be created accordingly, forecasting errors are still impossible to avoid. These forecasting errors are not only dangerous for the power system but also costly for wind farm operators. Battery energy storage system can compensate the forecast errors, in order to achieve a stable and continuous wind generation. In this respect, a real-time dispatch plan of wind farms can be optimized according to the forecasted dispatch plan. If the wind energy is marketed directly in German energy market, it means that the generated wind energy is equally traded with conventional energy in the same market price. The electricity price in spot market varies each day. Because the integrated renewable energy is cheaper than conventional energy and a large amount of renewable energy is marketed in the electricity market recently, even negative prices appear sometimes [43][44]. A large variation and more often negative electricity price give a chance or an incentive for wind farm operators to generate an optimal marketing strategy, which can exploit the price variation and negative price [45][46]. As mentioned before, wind energy is not dispatchable or partly uncontrollable. Thus battery energy storage system is so-called power buffer, which can modify the dispatch plan of wind turbines. A smart dispatch plan can be represented in a marketing strategy, which increases the revenue by charging wind energy into batteries at low electricity price and discharging at high electricity prices [47][48][49]. Especially when the electricity price is negative, the wind energy has to be charged into batteries. The application of arbitrage can exploit price variations at different market activities. However, a high reduction in battery cost and a high variation of electricity price are needed to get economic business case as system without storage [50][51][52].
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Design Options for a Strategic Reserve for the German Power Market and International Coordination

Design Options for a Strategic Reserve for the German Power Market and International Coordination

For  a  fixed  and  ex  ante  determined  strike  price  of  the  SR,  it  is  important  that  this  strike  price  (respectively  imbalance  tariff)  is  not  too  low  and  thereby  renders  investments  in  peaking  units  unprofitable.  With  more  demand  response  in  the  system  that  sets  the  price  in  peak  hours  and  thus  revenues for thermal units, the main criteria will thus be to not crowd out flexible demand rather than  thermal units. At what prices exactly flexible demand will participate in the market has yet to be proven.   Also  the  role  of  foreign  supply  and  demand  bids  during  scarcity  and  the  dispatch  of  SR  units  was  debated. It was asked if, for instance, TSOs can supply foreign demand bids in times of scarcity. Should  they start the strategic reserve to do so or leave this responsibility to neighboring TSOs? Likewise, it is  debated yet what protocols to follow if the SR in one country leads to re‐dispatch intraday in a second  country. In general, many cross border issues remain to be solved: How can different neighboring CRMs  interact  with  each  other,  as  the  French  capacity  market  with  a  potential  German  reserve?  While  free‐ riding on foreign payments for generation adequacy might be possible, still most national governments  pursue CRMs and hence this question will draw much attention in the future.  
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Balancing reserve provision in a decarbonized electricity sector

Balancing reserve provision in a decarbonized electricity sector

the aim to determine how much of a wind turbine’s capacity can be pre-qualified for balancing services (50Hertz et al., 2015). Pre-qualification of wind turbines to provide balancing reserves is the prerequisite of the participation. Technical and regulatory implementation hurdles have been taken (EWEA, 2014; Gesino, 2010; de Vos and Driesen, 2015), and in Germany two wind farms (86 MW) have been pre-qualified to provide up to 70 % of their installed capacity for negative TC (50Hertz, 2016). Götz and Baumgart (2014) assume that, for a security level of 99.994 %, up to 30 % of the entire German wind power can be used for balancing services when all turbines are pooled. Similar assumptions by Fraunhofer IWES (2014) assume a share of 10 % of wind capacity would be available for balancing services in a day-ahead regime. Depending on the scenario we assume a participation of wind power for positive and negative balancing reserves. For both SC and TC they can offer a total of 5 % or 10 % of their forecast feed-in in the 2025 application. We do not include the possibility of PV to provide (positive or negative) balancing reserves, as we assume that until 2025 a large share of PV installations are still decentral and not remotely controllable. Moreover, new battery storages could provide balancing reserves, still we do not assume new battery storages in our analysis for three reasons: First, prices in the SC and TC market are much lower than in the PC market, hence the provision of solely PC is the most likely option, where currently pilot projects exist. Second, the therefore required arbitrage profits from the spot market are not expected in the next ten years. Third, in line with reason two and forecasts for 2025 (compare 50Hertz et al., 2016a), not enough investments into battery storages are expected before 2040 in current long-term electricity investment models to play a substantial role for SC and TC balancing products.
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