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

Abstract

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.

Methods and Concepts for Designing and Validating Smart Grid Systems

“…For example, in [1], a market design was developed that addresses system balancing products within a web-of-cells (WoC) architecture. The focus is on a solution that is as economically efficient as possible.…”

Design of the Smart Grid Architecture According to Fractal Principles and the Basics of Corresponding Market Structure

“…WoC is the latest concept introduced into the landscape of the smart grid concepts. The cell definition has evolved very dynamically in a short time [28][29][30][31][32], is generic and does not appear unique in the literature [31,32]. In the cell-based decentralized control framework WoC, cells are defined as "non-overlapping topological subsets of a power system associated with a scale-independent operational responsibility" [31] without specifying the criteria for the practical definition of its size.…”

“…In the cell-based decentralized control framework WoC, cells are defined as "non-overlapping topological subsets of a power system associated with a scale-independent operational responsibility" [31] without specifying the criteria for the practical definition of its size. The design of market structure is handled separately, not in combination with the technical architecture to enable their harmonization [32][33][34]. There are also attempts to design the architecture of smart grids without using a particular concept [35,36].…”

The Regulatory Framework for Market Transparency in Future Power Systems under the Web-of-Cells Concept

“…In such a context, the market model and its design required for the practical realization of the proposed architecture of frequency and voltage control is developed as well. Within the WoC concept, this market is intended as an exchange, i.e., the type of organized marketplace where the CSO and the Balance and Voltage Control Service Providers (BSPs) meet to trade balancing and voltage control products in a voluntary, non-discriminatory and transparent way [5,6]. From this perspective, in order to correct market failures, market transparency is of high importance for the WoC concept and, therefore, should be addressed at high governmental level.…”