Electricity Market Mechanism regarding the Operational Flexibility of Power Plants

Abstract

Electricity market mechanisms designed to steer sustainable generation of electricity play an important role for the energy transition intended to mitigate climate change. One of the major problems is to complement volatile renewable energy sources by operationally flexible capacity reserves. In this paper, a proposal is given to determine prices on electricity markets taking into account the operational flexibility of power plants, such that the costs of longterm capacity reserves can be paid by short-term electricity spot markets. For this purpose, a measure of operational flexibility is introduced enabling to compute an inflexibility fee charging each individual power plant on a wholesale electricity spot market. The total sum of inflexibility fees is accumulated on the spot markets and then can be used to finance a capacity mechanism keeping the necessary reserves to warrant grid reliability. Here each reserve power plant then gets a reliable payment depending on its operational flexibility. The proposal is applied to an exemplary small grid, illustrating its main idea and also revealing the caveat that too high fees paradoxically could create incentives to employ highly flexible power plants on the spot market rather than to run them as backup capacity.

Local Energy Trading in Future Distribution Systems

“…In fact, the participants can ask DSO for general services, and it can introduce and offer possible ones. Due to consumers' access to various retail services and free entry into the market, this market is very competitive because consumers can change their retailer for better services and more reasonable prices [17]. In this market, a flat energy price is usually calculated based on the price of the transmission node, which can cause market inefficiency due to not paying attention to the distribution system's limitations [18].…”

Research on Electricity Market Trading Mechanism Considering Peak‐to‐Valley Ratio and Multitime Coupling

“…Te research on electric power medium-and long-term trading mainly focuses on the following three aspects: (1) Market Mechanism Research [1][2][3]. Most scholars have studied the existing rules.…”

“…(2) From the perspective of the implementer, the multiperiod electricity price design optimization is carried out with the maximization of the revenue of the implementer as the objective function [16][17][18]. (3) From the perspective of users, multiperiod electricity price design optimization is carried out to maximize user satisfaction [19,20].…”