TY - JOUR
T1 - A market framework for grid balancing support through imbalances trading
AU - Lago, Jesus
AU - Poplavskaya, Ksenia
AU - Suryanarayana, Gowri
AU - De Schutter, Bart
PY - 2021
Y1 - 2021
N2 - To correct grid imbalances and avoid grid failures, the transmission system operator (TSO) deploys balancing reserves and settles these imbalances by penalizing the market actors that caused them. In several countries, it is forbidden to influence the grid imbalances in order to let the TSO retain full control of grid regulation. In this paper, we argue that this approach is not optimal as market actors that trade imbalances under the supervision of the TSO can help balancing the grid more efficiently. For instance, some systems such as solar farms cannot participate in the standard balancing market but do have economic incentives to help regulate the grid by trading with imbalances. Based on this argument, we propose a new market framework where any market actor is allowed to trade with imbalances. We show that, using the new market mechanism, the TSO can keep full control of the grid balance while decreasing the balancing cost. This is of primary importance as: 1) novel approaches to reduce grid imbalances are needed as, while renewable sources are generally not used for grid balancing, the increasing integration of renewable energy sources creates higher imbalances. 2) While long-term storage of energy is key in the energy transition, it needs to become an attractive investment to ensure its widespread use; as we show, the proposed market can guarantee that. Based on a real case study, we show that the new market can provide 10–20% of the total balancing energy needed and reduce the balancing costs.
AB - To correct grid imbalances and avoid grid failures, the transmission system operator (TSO) deploys balancing reserves and settles these imbalances by penalizing the market actors that caused them. In several countries, it is forbidden to influence the grid imbalances in order to let the TSO retain full control of grid regulation. In this paper, we argue that this approach is not optimal as market actors that trade imbalances under the supervision of the TSO can help balancing the grid more efficiently. For instance, some systems such as solar farms cannot participate in the standard balancing market but do have economic incentives to help regulate the grid by trading with imbalances. Based on this argument, we propose a new market framework where any market actor is allowed to trade with imbalances. We show that, using the new market mechanism, the TSO can keep full control of the grid balance while decreasing the balancing cost. This is of primary importance as: 1) novel approaches to reduce grid imbalances are needed as, while renewable sources are generally not used for grid balancing, the increasing integration of renewable energy sources creates higher imbalances. 2) While long-term storage of energy is key in the energy transition, it needs to become an attractive investment to ensure its widespread use; as we show, the proposed market can guarantee that. Based on a real case study, we show that the new market can provide 10–20% of the total balancing energy needed and reduce the balancing costs.
KW - Balancing services
KW - Grid balancing
KW - Imbalance market
KW - Imbalance trading
KW - Market framework
KW - Renewable sources
KW - Seasonal storage systems
UR - http://www.scopus.com/inward/record.url?scp=85094146886&partnerID=8YFLogxK
U2 - 10.1016/j.rser.2020.110467
DO - 10.1016/j.rser.2020.110467
M3 - Article
AN - SCOPUS:85094146886
VL - 137
JO - Renewable & Sustainable Energy Reviews
JF - Renewable & Sustainable Energy Reviews
SN - 1364-0321
M1 - 110467
ER -