Market and regulatory aspects of trans‐national offshore electricity networks for wind power interconnection

Subsea cable connections are an essential part of offshore wind power projects. Apart from direct connections between an offshore wind park to the national grid, several alternatives can be envisaged, including the connection to interconnectors between countries or direct connection to a country outside the jurisdiction where the wind park is based. Besides the technical‐economical constraints of these new types of grid connection, market and regulatory aspects need to be assessed. The paper gives an overview of these trans‐national connection schemes for wind power and considers integration into electricity markets and discusses regulatory implications. The scope of the research is Western Europe. Copyright © 2009 John Wiley & Sons, Ltd.     

Role of the GB-France electricity interconnectors in integration of variable renewable generation

The integration of large capacities of wind and solar generation into the France and Great Britain (GB) power systems is expected to pose significant operational challenges. Electricity interconnectors can play a role in facilitating the integration of renewable generation in neighbouring countries by allowing power to flow freely between power systems and therefore smooth the net electricity demand. In this paper, role of the electricity interconnectors in efficient balancing of supply and demand in the France and GB power systems was evaluated in terms of overall reduction in the operational costs and curtailment of renewable generation, and also its impact on operation of gas-fired plants. The value of the France-GB interconnectors was studied for two generation mix scenarios in 2030 using PLEXOS. The outputs of the modelling showed the interconnectors will result in larger amount of wind and solar to be absorbed by both power systems which consequently will reduce overall operational costs and CO₂ emissions. In addition, the interconnectors will reduce burden on gas-fired plants compensating for variation in wind and solar generation. This can have a significant value in operation and required investment of gas networks in both countries.     

Interconnector capacity allocation in offshore grids with variable wind generation

Different capacity allocation regimes have a strong impact on the economics of offshore wind farms and on interconnectors in offshore grids. Integrating offshore generation in offshore grids is currently a subject of discussion for different regions, e.g. the North Sea. A novel question is how the interconnector capacity should be allocated for wind generation and for international power trading. The main difficulty arises from the stochastic nature of wind generation: in a case with radial connections to the national coast, the wind park owner has the possibility of aggregating the offshore wind park with onshore installations to reduce balancing demand. This is not necessarily the case if the interconnector capacity is sold through implicit or explicit auctions. Different design options are discussed and quantified for a number of examples based on Danish, Dutch, German and Norwegian power markets. It is concluded that treating offshore generation as a single price zone within the interconnector reduces the wind operator's ability to pool it with other generation. Furthermore, a single offshore price zone between two markets will always receive the lower spot market price of the neighbouring zones, although its generation flows only to the high‐price market. Granting the high‐price market income for wind generation as the opposite design option reduces congestion rents. Otherwise, compensation measures through support schemes or different balancing responsibilities may be discussed. Copyright © 2012 John Wiley & Sons, Ltd.     

Buying and selling power in the age of competition

The American electric power industry is currently in the throes of striving for workable competition. Driven by the converging forces of deregulation, technological revolution, and evolving customer expectations, electric utilities are having to compete as never before at both the wholesale and retail levels. At times, the transition has been particularly wrenching, with some utilities going through painful internal restructuring and others being caught up in external consolidation. Increasingly, the key to success in this more competitive environment is anticipating and actively responding to the forces that are shaping the new markets for electric power. Here, the author describes how such market management is the subject of pioneering research being conducted in EPRI's Utility Resource Planning and Management Program. On the wholesale side, this research centers on the development of powerful analytical methods to support utility decisions regarding new opportunities in the bulk power market. Research on retail market management is concentrated on developing innovative price-differentiated services that can enhance the value of electricity to customers and also foster a utility's long-term financial competitiveness     

偏差电量考核下风光储混合发电商的市场均衡博弈研究

为了更直观地分析风光储混合发电商对市场均衡博弈结果和市场力的影响,在偏差电量考核衡量风光储混合发电出力随机波动性的基础上,综合考虑各发电商的出力限制和储能系统的运行约束,建立以风光储混合发电商和传统发电商收益最大化为目标的市场均衡博弈模型,调用CPLEX软件求解利用非线性互补函数处理得到的混合整数规划模型,并对比分析了风光储混合发电商作为价格接受者和影响者参与电力市场竞争对均衡博弈电价和投标出力的影响。结果表明,风光储混合发电商参与电力市场竞争可抑制传统发电商的市场力,对电价有显著的"削峰填谷"作用;当风光储混合发电商作为价格影响者时,对电价的影响会减弱,但其收益有所增加。     

Market power issues in the reformed Russian electricity supply industry

The paper examines long-run and short-run levels of market power in the liberalised Russian electricity market. We observe that despite potential for market power abuse, actual exercise of market power remained low. We attribute the result to the bid-at-cost rule implemented as a part of a special unit commitment procedure on the day-ahead market. We first look at the industry restructuring and subsequent mergers and acquisitions. The M&A were undertaken in different market zones and did not seem to increase concentration although planned zone integration may worsen competition in the long run. We then examine short-run aspect of market power by estimating hourly price–cost mark-ups and assessing their dynamics in 2010 and 2011, a year preceding and following the market liberalisation, respectively. The hypothesis of actual market power abuse is tested, and rejected, using time series AR models. Further, a Tobit regression shows that the liberalisation decreased the mark-ups by about 1.66 percentage points.     

Modeling long-term dynamics of electricity markets

In the last decade, many countries have restructured their electricity industries by introducing competition in their power generation sectors. Although some restructuring has been regarded as successful, the short experience accumulated with liberalized power markets does not allow making any founded assertion about their long-term behavior. Long-term prices and long-term supply reliability are now center of interest. This concerns firms considering investments in generation capacity and regulatory authorities interested in assuring the long-term supply adequacy and the stability of power markets. In order to gain significant insight into the long-term behavior of liberalized power markets, in this paper, a simulation model based on system dynamics is proposed and the underlying mathematical formulations extensively discussed. Unlike classical market models based on the assumption that market outcomes replicate the results of a centrally made optimization, the approach presented here focuses on replicating the system structure of power markets and the logic of relationships among system components in order to derive its dynamical response. The simulations suggest that there might be serious problems to adjust early enough the generation capacity necessary to maintain stable reserve margins, and consequently, stable long-term price levels. Because of feedback loops embedded in the structure of power markets and the existence of some time lags, the long-term market development might exhibit a quite volatile behavior. By varying some exogenous inputs, a sensitivity analysis is carried out to assess the influence of these factors on the long-run market dynamics.     

Support schemes for renewable electricity in the European Union: Producer strategies and competition

Current discussion about how to reform European support schemes for renewable electricity neglects certain risks of market power in wholesale electricity markets. In a stylized Cournot model of interacting spot and forward electricity markets, I analyze how different price-based support schemes affect producer strategies and, ultimately, competition in the wholesale market. I compare the strategic behavior of renewable and conventional producers in terms of electricity production and forward market sales in the presence of two different price-based support schemes: feed-in tariffs and feed-in premiums. I show that the feed-in premium, which is the European Commission's current scheme of choice, may enhance market power and favor conventional electricity production. It may also reduce the likelihood of achieving the political objective to increase production from renewable energy sources.     

The competitive role of the transmission system in price-regulated power industries

This note shows how the transmission system can enhance competition in price-regulated power industries, thus extending earlier findings reported in the literature for deregulated industries. In the context of a two-technology, price-regulated power industry, we show that the interconnection of two markets initially supplied by a different monopoly reduces market power and raises welfare. We also show that the capacity of the transmission line plays a key role in determining whether market equilibrium lies closer to competition or monopoly.     

Transmission needs across a fully renewable European power system

The residual load and excess power generation of 30 European countries with a 100% penetration of variable renewable energy sources are explored in order to quantify the benefit of power transmission between countries. Estimates are based on extensive weather data, which allows for modelling of hourly mismatches between the demand and renewable generation from wind and solar photovoltaics. For separated countries, balancing is required to cover around 24% of the total annual electricity consumption. This number can be reduced down to 15% once all countries are networked together with unconstrained interconnectors. The reduction represents the maximum possible benefit of transmission for the countries. The total Net Transfer Capacity of the unconstrained interconnectors is roughly 11.5 times larger than current values. However, constrained interconnector capacities 5.7 times larger than the current values are found to provide 98% of the maximum possible benefit of transmission. This motivates a detailed investigation of several constrained transmission capacity layouts to determine the export and import capabilities of countries participating in a fully renewable European electricity system.     

Successful renewable energy development in a competitive electricity market: A Texas case study

The development of renewable energy in markets with competition at wholesale and retail levels poses challenges not present in areas served by vertically-integrated utilities. The intermittent nature of some renewable energy resources impact reliability, operations, and market prices, in turn affecting all market participants. Meeting renewable energy goals may require coordination among many market players.     

风电参与投标竞争的多能源市场博弈分析

在能源互联网框架下,利用电、气等多能源互补特性有助于缓解风电等可再生能源随机波动的不利影响。为弥补风电开发商在日前市场的投标偏差,首先给出一个考虑电力与天然气等多种能源的市场交易框架,其中参与日前电力市场竞争的风电开发商分别通过电转气(P2G)设备和燃气机组进行能源转换,处理风电实际出力过剩和不足这2种情况。然后建立风电开发商参与投标竞争的日前电力市场与天然气市场博弈模型,其中风电开发商、传统发电商和天然气生产商均以供应函数投标方式参与多能源市场竞争。最后,通过算例分析验证了理论模型的有效性。     

Challenges for engineers in the electric power industry

In pace with the worldwide trend, the Japanese electric power industries are being deregulated and entering into competitive markets. Generation and a large size retail market are open to competition. The transmission system is open for use by new power suppliers, while utilities get the freedom of new business expansion. Traditional electric power utilities and new players are actively preparing for the new environment. This article discusses the challenges and opportunities for engineers in the electric power industry created by the changes occurring in the industry today.     

Advanced mechanisms for the promotion of renewable energy—Models for the future evolution of the German Renewable Energy Act

The German Renewable Energy Act (EEG) has been very successful in promoting the deployment of renewable electricity technologies in Germany. The increasing share of EEG power in the generation portfolio, increasing amounts of fluctuating power generation, and the growing European integration of power markets governed by competition calls for a re-design of the EEG. In particular, a more efficient system integration and commercial integration of the EEG power is needed to, e.g. better matching feed-in to demand and avoiding stress on electricity grids. This article describes three different options to improve the EEG by providing appropriate incentives and more flexibility to the promotion mechanism and the quantitative compensation scheme without jeopardising the fast deployment of renewable energy technologies. In the “Retailer Model”, it becomes the responsibility of the end-use retailers to adapt the EEG power to the actual demand of their respective customers. The “Market Mediator Model” establishes an independent market mediator responsible to market the renewable electricity. This model is the primary choice when new market entrants are regarded as crucial for the better integration of renewable energy and enhanced competition. The “Optional Bonus Model” relies more on functioning markets since power plant operators can alternatively choose to market the generated electricity themselves with a premium on top of the market price instead of a fixed price.     

Development trend and countermeasure of electric power storage based on patent analysis

随着能源互联网发展，电力储能技术越来越重要，它是电网运行过程中“采发输变配用储”等各大环节的重要组成部分，特别是储能电池、储能控制、储能系统集成、储能管理运营等的储能领域相关技术非常关键，技术竞争也日趋激烈。专利信息是自主创新成果的重要载体，是开展竞争情报的重要信息源。基于专利视角，利用先进的语义专利检索系统，对电力储能领域专利的申请量、同族、PCT、地域、申请人、申请人与国际分类分布等进行分析，揭示电力储能领域研发态势和专利竞争态势，为我国政府、企业、科研院所等在电力储能领域的研发决策、产业化布局等方面提出专利战略先行，制定研发路径；根据储能市场和自身战略，考虑合理布局国内与国际市场；聚焦各自优势形成技术竞争壁垒，掌握话语权等三方面建设性发展对策。     

Strategic bidding and rebidding in electricity markets

Successful deregulation in electricity markets depends crucially on the ability of market regulation to promote and maintain free competition. There are, however, important physical characteristics in electricity markets, such as the constraints imposed by the physical transmission infrastructure, that have the potential to undermine competition and provide opportunities for market participants to exploit temporary positions of market power. In this paper, the regional market of Queensland, Australia is analysed. It is found that strategic behaviour by generators exists and is closely related to the occurrence of the kind of extreme price events that characterise many deregulated electricity markets. In addition, rebidding behaviour by base-load generators immediately after extreme price events is shown to have negative impacts on the operation of the market. The key message is that promotion of competition in electricity markets can have undesirable consequences unless the regulatory policy is carefully designed to counter strategic behaviour by market participants.     

Development of a virtual power market model to investigate strategic and collusive behavior of market players

In this paper, a virtual power market model is proposed to investigate the behavior of power market players from regulator's point of view. In this approach, strategic players are modeled in a multi-agent environment. These agents which are virtual representative of actual players forecast the prices and participate in the markets, exactly the same as real world situation. In addition, the role of ISO is encountered by using security constraint unit commitment (SCUC) and security constraint economic dispatch (SCED) solutions. Moreover, the interaction between market players is modeled using a heuristic dynamic game theory algorithm based on the supply function equilibria (SFE). In addition to the collusive behavior, using the proposed model, the short-term strategic behavior of players, which their effects will appear in long-term, can be simulated.The proposed model enables the market regulators to make decision before implementing new market rules with the confidence of their results. To represent the effectiveness of the proposed method, a case study including wind power plants is considered and the impact of various market rules on players’ behavior is simulated and discussed. Numerical studies indicate that simulating the strategic and collusive behavior prior to any change in the market rules is necessary.     

An agent-based analysis of the German electricity market with transmission capacity constraints

While some agent-based models have been developed for analyzing the German electricity market, there has been little research done on the emerging issue of intra-German congestion and its effects on the bidding behavior of generator agents. Yet, studies of other markets have shown that transmission grid constraints considerably affect strategic behavior in electricity markets. In this paper, the implications of transmission constraints on power markets are analyzed for the case of Germany. Market splitting is applied in the case of congestion in the grid. For this purpose, the agent-based modeling of electricity systems (AMES) market package developed by Sun and Tesfatsion is modified to fit the German context, including a detailed representation of the German high-voltage grid and its interconnections. Implications of transmission constraints on prices and social welfare are analyzed for scenarios that include strategic behavior of market participants and high wind power generation. It can be shown that strategic behavior and transmission constraints are inter-related and may pose severe problems in the future German electricity market.     

The art of market design-what's next for power markets and SMD?

Electric utilities use to be vertically integrated monopolies until we embarked on a restructuring of the industry to introduce competition in electric supply. There are many factors that influenced the transition to competition. Most important, perhaps, was the underlying premise that competitive markets could bring greater benefits to customers through efficiency and innovation than was possible under the existing regulatory regime. The California power crisis, Enron's meltdown, allegations of market manipulation, accounting improprieties, and the weak financial condition of many generators have caused some question that premise and have undermined the confidence in competitive markets. This article takes stock of where we are on the transition to competitive markets and the future of efforts to establish standard market design (SMD).     

Market power in the Nordic electricity wholesale market: A survey of the empirical evidence

We review the recent empirical research assessing market power on the Nordic wholesale market for electricity, Nord Pool. The studies find no evidence of systematic exploitation of system level market power on Nord Pool. Local market power arising from transmission constraints seems to be more problematic in some price areas across the Nordic countries. Market power can manifest itself in a number of ways that have so far escaped empirical scrutiny. We discuss investment incentives, vertical integration and buyer power, as well as withholding of base-load (nuclear) capacity.