Barriers to entry in frequency-regulation services markets: Review of the status quo and options for improvements

Borne, Olivier; Korte, Klaas; Pérez, Yannick; Petit, Marc; Purkus, Alexandra

doi:10.1016/j.rser.2017.08.052

Cited by 65 publications

(44 citation statements)

References 25 publications

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“…There is no single and universal definition of the market design [28][29][30][31][32]. Definitions significantly depend on, and they are related to the practical policy goals for achievement of which market design is developed, peculiarities of economic sector or country under consideration, aspects of market design discussed, analysis method applied, assessment criteria used or scientist's insights and penetration glance into the issue.…”

Section: Theoretical Backgroundmentioning

confidence: 99%

“…The products (balancing capacity and balancing energy) for primary control are acquired by entering into hourly, daily, weekly, monthly or annually contracts. The system balancing products for secondary and tertiary controls are purchased in the long-term markets by entering into contracts, the duration of which varies from week to year or more [30]. Certainly, in some countries both shortand long-term markets for the provision of secondary and tertiary services are established.…”

Section: System Balancing Product Resolution In Timementioning

confidence: 99%

“…The use of regulated price is related to the mandatory provision of the services by a few BSPs (often large producers) since there is no information to choose the BSPs based on their cost [30]. As it is argued in [30], even if the rules allow for new entrants, such as aggregators to propose system balancing products, the selection of the capacity will be made by an administrative rule, which would not allow new participants competing effectively with incumbent market participants. Thus, this form of pricing should be or is used, when market power is an issue in the market.…”

Section: Pricing Mechanisms For the System Balancing Productsmentioning

confidence: 99%

“…However, a regulated price is not a desirable choice since it reflects very imperfectly the actual cost of providing the balancing service, especially, if cost changes in time and circumstances [19]. This means that regulated price does not take into account the market value of electricity generation [30]. With a fixed guaranteed and unchanging price, a generator can receive cross-subsidies [30].…”

Section: Pricing Mechanisms For the System Balancing Productsmentioning

confidence: 99%

“…This means that regulated price does not take into account the market value of electricity generation [30]. With a fixed guaranteed and unchanging price, a generator can receive cross-subsidies [30].…”

Section: Pricing Mechanisms For the System Balancing Productsmentioning

confidence: 99%

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Economically Efficient Design of Market for System Services under the Web-of-Cells Architecture

et al. 2018

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Significant power sector developments beyond 2020 will require changing our approach towards electricity balancing paradigms and architectures. Presently, new electricity balancing concepts are being developed. Implementation of these in practice will depend on their timeliness, consistency and adaptability to the market. With the purpose of tailoring the concepts to practice, the development of a balancing market is of crucial importance. This article deals with this issue. It aims at developing of a high-level economically efficient market design for the procurement of system balancing products within the Web-of-Cells architecture. Literature and comparative analysis methods are applied to implement the aim. The analysis results show that a more efficient balancing capacity allocation process should be carried out in a competitive way with closer allocation time to real-time, especially with increased penetration of renewable energy sources. Bid time units, the timing of the market, procurement and remuneration schemes as well pricing mechanisms are the most decisive elements of the market. Their respective advantages and disadvantages are analyzed in the article, as well as their analysis is done against the selected assessment criteria. The results of the analysis show that seeking to improve the operational efficiency of the market, the sequential approach to the market organization should be selected and short-term market time units should be chosen. It is expected that price efficiency could be improved by establishing an organized market where standardized system balancing products should be traded. The balance service providers, who own capital expenditures (CAPEX) sensitive production units, should be remunerated both for the availability of balancing capacities and for their utilization. Uniform pricing rule and cascading procurement principal should be applied to improve the utilization efficiency.

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Section: Theoretical Backgroundmentioning

confidence: 99%

Section: System Balancing Product Resolution In Timementioning

confidence: 99%