Thursday, 29 September 2016
09:00 - 10:30 Making electricity markets fit for wind
Integrating wind power into the electricity market  
          

Wind power is variable and dependent on the weather, so fundamentally different from classic fuel-based power. Electricity markets wereoriginally designed with conventional central power stations in mind, but the developments in the last two decades have introduced ever larger amounts of renewable energy.

The session provides an overview of the different markets for wind power, and on the role wind power can play in those. The main angle of the session is money, but the underlying need to balance the grid at all times can be monetized in different ways. The session also shows how wind power can be a good grid citizen, and get access to different income than just to sell the power.

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Learning objectives

• Wind power in the different markets;
• Different markets for wind power;
• Cost, value and income opportunities of wind power.

Co-chair(s):

Andrei Morch SINTEF Energy, Norway
Co-authors:
Ove Wolfgang (1) ^F Sophie Dourlens-Quaranta (2) Daniel Fraile (3) Aurele Fontaine (4)
(1) SINTEF, Trondheim, Norway (2) TECHNOFI, Sophia Antipolis, France (3) Wind Europe, Brussels, Belgium (4) RTE, Paris, France

Post-2020 framework for a liberalised electricity market with large share of renewable energy sources

Introduction

The European Electricity Regulatory Forum (Florence Forum) decided in November 2008 to develop an EU-wide Target Model (TM) for integration of European power markets. Currentlhy, the TM is in the process of implementation through the adoption of the so-called network codes. The EU-funded project "Market4RES" (2014-2016) considers the further development of the TM to support a more efficient integration of renewable electricity (RES-E) in line with the 2020 objectives and beyond. Key issues are support schemes for RES, market designs promoting the participation of RES and demand response, and investment signals for firm capacity. We will present the main findings from this project.

Approach

The project combines the qualitative assessment of alternatives for possible market developments supporting the abovementioned objectives with the quantitative assessment of the most promising ones. Results from these are the basis for the development of policy recommendations. One key objective is to facilitate dialogue amongst relevant stakeholders.

Main body of abstract

The diagnosis of the current TM and RES support schemes in operation in Europe showed that the policy for promoting integration of RES-E technologies has been a success story. However, now, adverse effects of large RES-E penetration are becoming visible. Moreover, the current TM does not deal with RES support schemes nor with capacity markets. Based on this diagnosis, Market4RES has suggested modifications to the current TM up to 2020 and beyond, and studied impacts of these on electricity markets and the system through the use of numerical simulation tools. On this basis, a set of guidelines and a roadmap for the further development of markets and support schemes for RES and capacity is developed. The roadmap focuses on the development of market designs for promoting the participation of RES before/after 2020.

Conclusion

In principle, energy-only markets can provide sufficient incentives for generation investments. In case capacity markets are implemented, they should be designed not to interfere with short-term price signals. We recommend a centralized auction with cross border provision through statistical means. A financial option with a high strike price is recommended. Some of the support schemes for RES that have been important in the past are not ideal for the future. For instance, a feed-in premium is preferred over feed-in tariff, whereas long term auctions are a very interesting approach to consider further. Most importantly, there should never be a strictly positive producer price for RES producers at times when the electricity price is negative. Demand response can be triggered both explicitly in market or indirectly through DSO control. For day-ahead market configurations, zonal prices with several price-areas within TSOs' control areas are favourable, whereas nodal pricing may result in a lack of liquidity. For intraday, continuous trade should be complemented with discrete auctions to ensure sufficient liquidity. Short-term purchasing of reserves enables RES participation. In the further process of developing European power markets, there should be a continued focus on setting up market rules to promote the participation of renewable generation and demand response. This will reduce the level of RES-support needed, enhance flexibility in the power system, and reduce costs of RES integration.


Learning objectives
The main learning objective from the presentation will be concrete proposals as well as general considerations for how European electricity market designs should evolve towards 2020 and beyond to reduce overall system costs of integrating additional renewable generation in power supply.