Achim Woyte (3E)

1
MARKET MECHANISMS FOR WIND POWER INTEGRATION
Achim Woyte (3E) with contributions from C.
Srikandam (dena) N. Moldovan C. Kleinschmidt
(Kema) P. Meibom H. Larsen (Risø) K. Purchala
(Tractebel)
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OUTLINE

• Starting point
• Market integration
• Current inefficiencies
• Approach
• Market modelling
• Parameters
• Results
• Energy economic context
• Rescheduling and cross-border exchange
• Recommendations

3
MARKET INTEGRATION

• PAST
• Vertically integrated
• PRESENT
• Unbundling TSO vs. producers / suppliers
• Free - national markets
• FUTURE
• European integration
• Regional markets

4
CURRENT INEFFICIENCIES
e.g., capacity allocation at the German-Danish
border (2006)

• ALLOCATION STATISTICS
• 49 efficient
• 33 inefficient
• 18 no capacity used

5
MARKET MODELLING
Price

• MODELLING APPROACH
• Unit commitment dispatch models
• Stochastic optimisation
• Wind power hourly variability
• Wind power uncertainty
• Wilmar probabilistic scenario tree
• Prosym forecast error ? reserve requirement
• RESULTS
• Socio-economic indicators
• system cost, fuel types, exchange
• Market indicators
• prices and value, curtailment, ...

Supply
Demand
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PARAMETERS
Prosym t-3best NTC
Unit commitment rescheduling
Capacity constraints
best case
Prosym t-3base NTC
WilmarExDay2020
intra-day
Wilmar AllInt-ExRes2020
base case
Prosym d-1base NTC
Wilmar AllDay2020
day-ahead
Cross-border exchange
day-ahead
minutes-ahead
intra-day
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PARAMETERS
Prosym t-3best NTC
WilmarAllInt2030
WilmarExDay2030
Wilmar AllInt-ExRes2030
Unit commitment rescheduling

• TRADEWIND
• Propose market parameters adapted to wind power
• Describe market performance with different
  designs/stages of integration
• Quantify by means of market indicators
• Policy recommendations

Capacity constraints
Prosym d-1best NTC
Wilmar AllDay2030
best case
Prosym t-3base NTC
WilmarAllInt2020
WilmarExDay2020
intra-day
Wilmar AllInt-ExRes2020
base case
Prosym d-1base NTC
Wilmar AllDay2020
day-ahead
Cross-border exchange
day-ahead
minutes-ahead
intra-day
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ENERGY ECONOMIC CONTEXT

• SHARE OF WIND POWER
• With 128 GW wind installed between 2008 and 2020
• system cost decrease
• 10.8 bn. (10) per year
• return on public support
• national wholesale price decrease
• lt 16 /MWh, strongly differing per country

Photo C-Power
9
ENERGY ECONOMIC CONTEXT

• FUEL PRICES
• EC PRIMES baseline (2007)
• e.g., oil 2020 61 per boe (2005)
• DOUBLED OIL GAS PRICES
• system cost increase (2020)
• 25 bn. (23) per year
• return on public support
• national wholesale price increase
• 20-30 /MWh
• Increased value of fuel-free generation

Photos www.greenscreen.org
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RESCHEDULING CROSS-BORDER EXCHANGE

• TIME DIMENSION
• Reduced wind power forecast error
• system costs savings 200 M/yr (0.2)
• TIME AND SPACE DIMENSION
• Intra-day rescheduling of cross-border exchange
• system costs savings 1-2 bn /yr (1)
• Coss-border exchange of reserves
• very slight effect 40 M/yr (0.04)
• differences in reserve capacity requirements per
  country

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RECOMMENDATIONS I

• INTERNATIONAL DIMENSION
• allow intra-day rescheduling of interconnectors
• establish cross-border intra-day markets
• CONGESTION MANAGEMENT
• introduce implicit auctioning of interconnectors
  (market coupling/splitting
• apply a flow-based approach
• pursue the regional markets initiative

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RECOMMENDATIONS II

• FLEXIBILITY OF POWER PLANTS
• slower power plants to participate in intra-day
  reschuling
• slow meaning start-up time gt 1h
• RESERVE POWER EXCHANGE
• yields savings in investment rather than system
  cost
• investigate trade off between national
  investments and international exchange

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TASKS OUTLOOK

• FLEXIBILITY
• How to treat negative prices
• Introduce demand elasticity
• Quantify its potential
• RESERVE POWER
• Consider reserve power from wind
• INFRASTRUCTURE
• Value vs. cost of transmission infrastructure