Reserve Procurement and Flexibility Services in Power Systems with High Renewable Capacity: Effects of Integration on Different Market Designs

Date Published: December 2019

Authors: Ruth Domíngueza, Giorgia Oggionib, Yves Smeers

The paper presents three scheduling models formulated as stochastic programs that represent the day-ahead energy market, the reserve procurement, and the real-time balancing market in a renewable-dominated power system. Among the three proposed models, two are inspired by reserve procurement mechanisms currently applied in Europe, where reserves are committed either before (in the case of Model 1) or after (in Model 2) the clearing of the day-ahead energy market. The third model is used as a benchmark in which energy and reserve capacity are co-optimized. The authors assess the impact of the changes on market participants’ remuneration and test the impact of cross-border constraints such as those in the European power system. The results show that Model 1 is the least efficient market design as it leads to a misallocation of the available capacity, while Model 2 becomes as efficient as Model 3 when the transmission system operators procure reserves in a coordinated way. Finally, a coordinated procurement of reserves reduces the system operating costs in all models.

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