Pricing of Power System Balancing Resources and Imbalances in Scarcity Situations
Seppälä, Eveliina (2017)
Seppälä, Eveliina
2017
Sähkötekniikka
Tieto- ja sähkötekniikan tiedekunta - Faculty of Computing and Electrical Engineering
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Hyväksymispäivämäärä
2017-08-16
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:tty-201708241728
https://urn.fi/URN:NBN:fi:tty-201708241728
Tiivistelmä
One goal of European Union energy politics is to reach a leadership in use of renewable energies. Integrating the weather variable renewable energy in to the present power system requires also flexible resources that are able to balance the production and consumption of power system also in those situations, when weather conditions are not optimal for weather variable energy sources. In system which is based on market principles, the value of flexibility should be reflected in prices that result from balancing needs. Especially in cases, where there is a shortage of flexible resources, the price should reflect this scarcity.
This thesis surveys, what is meant by scarcity pricing in context of electricity markets and how scarcity pricing could be applied into regulating and imbalance prices in Finland. A look is taken into formation of regulating and imbalance prices in situations, when there is scarcity with the resources that can implement the up-regulation, meaning the regulation that either increases production or decreases consumption. Aim is to find out the mechanisms in present price forming model that prevent the price rise to reflect the value that consumers give for the scarce resource and also propose possible improvements in price formation and discuss the possible impacts of these proposed improvements.
The scarcity situation occurs in real-time, when the availability of resources for regulating are low compared to the need for regulating. Surveying the usage of bids that were given to Fingrid’s regulating market during the time interval of 2013 – 2016, there was altogether 18 hours, when 90 % or more of the voluntary bids given by market participants were used. About two of third cases were associated with unplanned unavailability of either production plant or interconnector. Because of the principles of price formatting in cases with network interruption, the cases when there was a loss of interconnection, the regulating and imbalance prices both stayed low being about level of spot-price of the same hour. In these cases called special regulation, the price does not give signal of scarce resources. In other cases the price rose clearly over the average price of years 2013 – 2016. The highest price hit was 3000 €/MWh.
In this thesis also the possible implementation of scarcity adder in cases, when transmission system operator needs to use reserve that is meant to keep the power system to stand disturbances is discussed. The scarcity adder would bring the market participants incentive to participate in to the system balancing, which again can bring new business opportunities. The scarcity adder applied to the imbalance price would also allocate the costs of these reserves better to those participants who are creating the need for these reserves.
This thesis surveys, what is meant by scarcity pricing in context of electricity markets and how scarcity pricing could be applied into regulating and imbalance prices in Finland. A look is taken into formation of regulating and imbalance prices in situations, when there is scarcity with the resources that can implement the up-regulation, meaning the regulation that either increases production or decreases consumption. Aim is to find out the mechanisms in present price forming model that prevent the price rise to reflect the value that consumers give for the scarce resource and also propose possible improvements in price formation and discuss the possible impacts of these proposed improvements.
The scarcity situation occurs in real-time, when the availability of resources for regulating are low compared to the need for regulating. Surveying the usage of bids that were given to Fingrid’s regulating market during the time interval of 2013 – 2016, there was altogether 18 hours, when 90 % or more of the voluntary bids given by market participants were used. About two of third cases were associated with unplanned unavailability of either production plant or interconnector. Because of the principles of price formatting in cases with network interruption, the cases when there was a loss of interconnection, the regulating and imbalance prices both stayed low being about level of spot-price of the same hour. In these cases called special regulation, the price does not give signal of scarce resources. In other cases the price rose clearly over the average price of years 2013 – 2016. The highest price hit was 3000 €/MWh.
In this thesis also the possible implementation of scarcity adder in cases, when transmission system operator needs to use reserve that is meant to keep the power system to stand disturbances is discussed. The scarcity adder would bring the market participants incentive to participate in to the system balancing, which again can bring new business opportunities. The scarcity adder applied to the imbalance price would also allocate the costs of these reserves better to those participants who are creating the need for these reserves.