Interactions between the design of short-term electricity markets in the CWE region and power system flexibility

Abstract

Short-term electricity markets are generally defined as markets that take place from the day-ahead stage until physical generation and consumption. These markets include dayahead, intra-day, and real-time balancing markets. In Europe, the first two are managed by power exchanges, while the third consists of reserve procurement and imbalance settlement and is operated by the local transmission system operator. Short-term markets are important tools to deal with net demand variability in the system, in which the need for flexibility is expressed and its provision is valorized. Due to the ongoing integration of variable renewables in the generation mix, the system's variability is increasing as a result of the limited controllability and predictability of those resources. As such, these markets become increasingly important. The contribution of this article is a comprehensive upto-date discussion of the key design parameters and functioning of all three short-term markets, and their impact on the demand for and supply of flexibility. An understanding of the design and its implications is useful to policy-makers who are considering changes to facilitate the integration, availability, or valorization of flexibility, while also contributing to the decision-making of flexibility investors and operators. The geographical scope is the Central Western European region, including the Belgian, French, German, and Dutch market zones.

A new approach to electricity market clearing with uniform purchase price and curtailable block orders

“…In particular, the current day-ahead European electricity market is the result of a merging process that took place during the last three decades and involved all the main European countries [9], and it should lead to significant social welfare improvements [10]. However, the complete integration involves several difficulties both in terms of design [11], and interaction between different markets [12]. In particular, the lack of an original common design, leads to a European day-ahead electricity market that is characterized by heterogeneous orders (e.g., stepwise orders, piecewise linear orders, simple and linked block orders [13]), and rules (e.g., minimum income condition [14], uniform purchase price [15]), which cannot be easily harmonized.…”

“…1. the products of a binary variable and a continuous bounded variable, as u e tk π t in (9); 2. the product π t d π tk in the UPP definition (6); 3. the product ζ ti k∈K π ti d d tk in the strong duality (29), and in (6) due to (11).…”

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

“…It is known that at the procurement side of the market for system balancing products attention should paid at balancing service classes, reserve requirements, control system, timing of the markets, activation strategy, bid requirements, program time unit, scope of balance responsibility, gate closure times (GCT), types of balances, closed/opened portfolio positions [16], types of market participants, contracting approach, contract duration, scoring rule, dispatch criteria and cost allocation [17], transaction mechanisms and payments to the BSPs, response time and duration period [18], structure for bids and payments [19], types of procurement and remuneration methods, price caps [19,20], types of auction [21], number of markets, pricing rule, number of bid submissions, scarcity pricing and cascading procurement [22], approach towards markets organization [23] and other. However, with the purpose to establish an economically efficient market design, the following market design elements are considered [16,[24][25][26]38,39]: system balancing product resolution in time, bid time unit, frequency of bidding, frequency of clearance, establishment of Merit Order list, distance to real time of the auction, procurement scheme, remuneration scheme and pricing mechanism.…”

“…More precisely, it is responsible for the secure operation of the Cell, measurement of electricity demand on high voltage (HV), medium voltage (MW) or low voltage (LV) grid, maintenance of HV, MV or LV grid and procurement of the system balancing products for its Cell (based on [41]), which demand arises due to the occurrence of the following events [20]:…”

“…There is a large volume of literature [14][15][16][17][18][19][20][21][22][23][24][25][26][27] that discusses the design of balancing markets in the presence of intermittent RES. The novelty of this article beyond the prevailing literature is that it proposes harmonized and unified rules for trading standardized system balancing products intraand inter-Cell between the identified types of the market participants in an organized market to implement the merit order collection (MOC) and merit order decision (MOD) functions of Web-of-Cells architecture.…”