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ID:
163535
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| Summary/Abstract |
Thanks to new technological advancements and EU policy impulse, distributed energy resources (DER) are poised to become a viable alternative to conventional electricity generation for the provision of balancing services to transmission system operators. In this paper we show that the design variables that affect DER access to and participation in the organized balancing market include different features of auction configuration as well as a number of formal, administrative and technical aspects of market design. In a comparative case study of the balancing markets in Austria, Germany and the Netherlands, we determine the extent to which a given market design effectively facilitates DER participation. To structure this analysis, we designed an assessment framework that provides a comprehensive tool for the assessment of balancing markets in Europe vis-à-vis DER participation. Our results show that flexible pooling conditions, a higher bidding frequency and product resolution, and the authorization of non-precontracted bids, among others, can significantly ease DER integration in the market. Different design variables, however, can enhance or neutralize each other's effects, so their interrelations need to be taken into account in order to achieve an improved and harmonized balancing market design.
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| 2 |
ID:
181436
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| Summary/Abstract |
Electricity balancing is one of the main demanders of short-term flexibility. To improve its integration, the recent regulation of the European Union introduces a common standalone balancing energy market. It allows actors that have not participated or not been awarded in the preceding balancing capacity market to participate as voluntary bidders or ‘second-chance’ bidders. We investigate the effect of these changes on balancing market efficiency and on strategic behavior in particular, using a combination of agent-based modelling and reinforcement learning. This paper is the first to model agents' interdependent bidding strategies in the balancing capacity and energy markets with the help of two collaborative reinforcement learning algorithms. Results reveal considerable efficiency gains in the balancing energy market from the introduction of voluntary bids even in highly concentrated markets while offering a new value stream to providers of short-term flexibility. ‘Second-chance’ bidders further drive competition, reducing balancing energy costs. However, we warn that this design change is likely to shift some of the activation costs to the balancing capacity market where agents are prompted to bid more strategically in the view of lower profits from balancing energy. As it is unlikely that the balancing capacity market can be removed altogether, we recommend integrating European balancing capacity markets on par with balancing energy markets and easing prequalification requirements to ensure sufficient competition.
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