Impact of wind farm integration on electricity market prices

Wind generation is considered one of the most rapidly increasing resources among other distributed generation technologies. Recently, wind farms with considerable output power rating are installed. The variability of the wind output power, and the forecast inaccuracy could have an impact on electricity market prices. These issues have been addressed by developing a single auction market model to determine the close to real-time electricity market prices. The market-clearing price was determined by formulating an optimal power flow problem while considering different operational strategies. Inaccurate power prediction can result in either underestimated or overestimated market prices, which would lead to either savings to customers or additional revenue for generator suppliers.     

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。     

考虑可再生能源消纳的火电机组市场力评估

随着可再生能源并网比例的不断提升,实现其全额消纳会对火电机组的市场机会产生越来越大的冲击。针对这一现象,提出了火电机组综合市场力评估方法。考虑可再生能源发电并网下火电机组备用作用的强化,对传统市场力指标——Lerner指数进行修正,建立了反映火电机组在电量市场与备用市场综合市场力的改进Lerner指标;同时计及风电出力的不确定性,采用正态分布与拉普拉斯分布的联合概率密度函数更好地反映风电预测误差的尖峰厚尾特性,完善了备用需求的表达;以电量完全竞争作为假设前提,采用电量—备用联合优化模型模拟电力市场交易,进而完成对火电机组综合市场力的准确度量。以10机系统为例进行仿真计算,验证了改进指标的有效性并分析风电渗透率、风电预测精度等因素变化对火电机组综合市场力的影响。     

Area price and demand response in a market with 25% wind power

Denmark, east and west of the Great Belt are bidding areas with separate hourly area prices for the Nord Pool power exchange, covering four Nordic countries and parts of Germany. The share of wind power has now increased to 25% on an annual basis in western Denmark. This has a significant impact not only on the electricity wholesale prices, but also on the development of the market. Hourly market data are available from the website of Danish TSO from 1999. In this paper these data are analysed for the period 2004–2010. Electricity generators and customers may respond to hourly price variations, which can improve market efficiency, and a welfare gain is obtained. An important limitation for demand response is events of several consecutive hours with extreme values. The analysis in this paper is a summary and update of some of the issues covered by the EU RESPOND project. It shows that extreme events were few, and the current infrastructure and market organisation have been able to handle the amount of wind power installed so far. This recommends that geographical bidding area for the wholesale electricity market reflects external transmission constraints caused by wind power.     

Wind power in the Danish liberalised power market—Policy measures,price impact and investor incentives

Wind power has a strong position at the Danish electricity market, mainly caused by high feed-in tariffs in the 1990s. Investments in new wind-power installations on land, however, have declined dramatically after the Danish electricity market was liberalised in 1999. First, the paper describes how policy measures directed towards wind power have been redesigned to match the liberalised market. Then, we estimate the impact of the redesigned tariffs on the electricity prices. Finally, we assess whether the new tariffs make an incentive to invest in wind power. The paper concludes that the new tariffs not by itself make evidence for the actual Danish recession in new wind-power installations after the electricity reform. The main causes could include a combination of problems in spatial planning, high risk aversion of new wind turbine investors and perhaps more favourable support schemes in other countries.     

Market protocols in ERCOT and their effect on wind generation

Integrating wind generation into power systems and wholesale electricity markets presents unique challenges due to the characteristics of wind power, including its limited dispatchability, variability in generation, difficulty in forecasting resource availability, and the geographic location of wind resources. Texas has had to deal with many of these issues beginning in 2002 when it restructured its electricity industry and introduced aggressive renewable portfolio standards that helped spur major investments in wind generation. In this paper we discuss the issues that have arisen in designing market protocols that take account of these special characteristics of wind generation and survey the regulatory and market rules that have been developed in Texas. We discuss the perverse incentives some of the rules gave wind generators to overschedule generation in order to receive balancing energy payments, and steps that have been taken to mitigate those incentive effects. Finally, we discuss more recent steps taken by the market operator and regulators to ensure transmission capacity is available for new wind generators that are expected to come online in the future.     

The impact of the North Atlantic Oscillation on electricity markets: A case study on Ireland

The North Atlantic Oscillation (NAO) is a large-scale atmospheric circulation pattern driving climate variability in north-western Europe. As the deployment of wind-powered generation expands on electricity networks across Europe, the impacts of the NAO on the electricity system will be amplified. This study assesses the impact of the NAO, via wind-power generation, on the electricity market considering thermal generation costs, wholesale electricity prices and wind generation subsidies. A Monte Carlo approach is used to model NAO phases and generate hourly wind speed time-series data, electricity demand and fuel input data. A least-cost unit commitment and economic dispatch model is used to simulate an island electricity system, modelled on the all-island Irish electricity system. The impact of the NAO obviously depends on the level of wind capacity within an electricity system. Our results indicate that on average a switch from negative to positive NAO phase can reduce thermal generation costs by up to 8%, reduce wholesale electricity prices by as much as €1.5/MWh, and increase wind power generators' revenue by 12%.     

电力市场环境下风-水电联合优化运行策略研究

为了促进风电场在电力市场环境下的发展,提出了一种风-水电站联合参与电力市场优化运行的策略。该策略综合考虑了从日前能量市场及调节备用容量市场中取得的收益,以期望收益最大化为目标,加入了水电站运行的限制,建立了含全天24个时段的混合整数规划模型,通过求解模型得出了各市场中的最优能量及容量申报,并基于实际的水电站与风电场参数进行了算例仿真。测试结果表明,水电站与风电场联合运行可降低风电出力的随机性对收益的负面影响,经济效益明显;风电出力的波动、能量不平衡的惩罚系数等因素都会对结果造成影响。     

High penetration wind generation impacts on spot prices in the Australian national electricity market

This paper explores wind power integration issues for the South Australian (SA) region of the Australian National Electricity Market (NEM) by assessing the interaction of regional wind generation, electricity demand and spot prices over 2 recent years of market operation. SA's wind energy penetration has recently surpassed 20% and it has only a limited interconnection with other regions of the NEM. As such, it represents an interesting example of high wind penetration in a gross wholesale pool market electricity industry. Our findings suggest that while electricity demand continues to have the greatest influence on spot prices in SA, wind generation levels have become a significant secondary influence, and there is an inverse relationship between wind generation and price. No clear relationship between wind generation and demand has been identified although some periods of extremely high demand may coincide with lower wind generation. Periods of high wind output are associated with generally lower market prices, and also appear to contribute to extreme negative price events. The results highlight the importance of electricity market and renewable policy design in facilitating economically efficient high wind penetrations.     

The impact of wind power on electricity prices

This paper investigates the impact of wind power on electricity prices using a production cost model of the Independent System Operator – New England power system. Different scenarios in terms of wind penetration, wind forecasts, and wind curtailment are modeled in order to analyze the impact of wind power on electricity prices for different wind penetration levels and for different levels of wind power visibility and controllability. The analysis concludes that electricity price volatility increases even as electricity prices decrease with increasing wind penetration levels. The impact of wind power on price volatility is larger in the shorter term (5-min compared to hour-to-hour). The results presented show that over-forecasting wind power increases electricity prices while under-forecasting wind power reduces them. The modeling results also show that controlling wind power by allowing curtailment increases electricity prices, and for higher wind penetrations it also reduces their volatility.     

Does bulk electricity storage assist wind and solar in replacing dispatchable power production?

This paper discusses the impact of bulk electric storage on the production from dispatchable power plants for rising variable renewable electricity shares. Two complementary optimization frameworks are used to represent power systems with a varying degree of complexity. The corresponding models approximate the wholesale electricity market, combined with the rational retirement of dispatchable capacity. Two different generic storage technologies are introduced exogenously to assess their impact on the system.The analysis covers two countries: France, where the power supply's large nuclear share allows for the discussion of storage impact on a single generator type; and Germany, whose diverse power supply structure enables storage interactions with multiple electricity generators. In the most general case, additional storage capacity increases dispatchable power production (e.g. nuclear, coal) for small wind and solar shares, i.e. it compensates the replacement induced by renewable energies. For larger variable renewable electricity volumes, it actively contributes to dispatchable power replacement. In a diverse power system, this results in storage-induced sequential mutual replacements of power generation from different plant types, as wind and solar capacities are increased.This mechanism is strongly dependent on the technical parameters of the storage assets. As a result, the impact of different storage types can have opposite signs under certain circumstances. The influence of CO₂ emission prices, wind and solar profile shapes, and power plant ramping costs is discussed.     

An integrated reservoir-power system model for evaluating the impacts of wind integration on hydropower resources

Despite the potential for hydroelectric dams to help address challenges related to the variability and unpredictability of wind energy, at present there are few systems-based wind-hydro studies available in the scientific literature. This work represents an attempt to begin filling this gap through the development of a systems-based modeling framework for analysis of wind power integration and its impacts on hydropower resources. The model, which relies entirely on publicly available information, was developed to assess the effects of wind energy on hydroelectric dams in a power system typical of the Southeastern US (i.e., one in which hydropower makes up <10% of total system capacity). However, the model can easily reflect different power mixes; it can also be used to simulate reservoir releases at self-scheduled (profit maximizing) dams or ones operated in coordination with other generators to minimize total system costs. The modeling framework offers flexibility in setting: the level and geographical distribution of installed wind power capacity; reservoir management rules, and static or dynamic fuel prices for power plants. In addition, the model also includes an hourly ‘natural’ flow component designed expressly for the purpose of assessing changes in hourly river flow patterns that may occur as a consequence of wind power integration. Validation of the model shows it can accurately reproduce market price dynamics and dam storage and release patterns under current conditions. We also demonstrate the model's capability in assessing the impact of increased wind market penetration on the volumes of reserves and electricity sold by a hydroelectric dam.     

Electricity market models and RES integration: The Greek case

This paper presents an extensive analysis of the Greek electricity market for the next 7-year period (2014–2020) based on an hour-by-hour simulation considering five different RES technologies, namely wind, PV, small hydro, biomass and CHP with emphasis on PV integration. The impact of RES penetration on the electricity market operation is evaluated under two different models regarding the organization of the Greek wholesale day-ahead electricity market: a mandatory power pool for year 2014 (current market design) and a power exchange for the period 2015–2020 (Target Model). An integrated software tool is used for the simulation of the current and the future day-ahead market clearing algorithm of the Greek wholesale electricity market. Simulation results indicate the impact of the anticipated large-scale RES integration, in conjunction with each market model, on specific indicators of the Greek electricity market in the long-term.     

Integration of wind power in the liberalized Dutch electricity market

Wind power is becoming a large‐scale electricity generation technology in a number of European countries, including the Netherlands. Owing to the variability and unpredictability of wind power production, large‐scale wind power can be foreseen to have large consequences for balancing generation and demand in power systems. As an essential aspect of the Dutch market design, participants are encouraged to act according to their energy programs, as submitted day‐ahead to the system operator. This program responsibility shifts the burden of balancing wind power away from the system operator to the market. However, the system operator remains the responsible party for balancing any generation/load imbalances that may still be arising in real time. In this article, features that are unique for the Dutch market design are presented and their implications on the system integration of wind power are investigated. It is shown that the Dutch market design penalizes the intermittent nature of wind power. A discussion of opportunities and threats of balancing wind power by use of market forces is provided. Last, an outline is given of future work. Copyright © 2006 John Wiley &Sons, Ltd.     

Potential of trading wind power as regulation services in the California short-term electricity market

A short-term electricity market is usually composed of the energy market and ancillary service market. However, wind power is not allowed to be traded in ancillary service markets although it has been proven technically feasible to be regulation services. This paper aims to explore the market potential of trading wind power as regulation services in the California electricity market. A model for wind power trade in the day-ahead (DA) market is established considering the uncertainties of market prices and wind power. An optimal trading strategy for wind power producers is derived by using an analytical algorithm. Trading wind power as regulation is tested by using actual data and the impacts of market control on the market outcome are discussed. The results show that, based on the current framework of the California electricity market, wind power producers can earn much more money if they bid in the DA energy and regulation markets than if they only bid in the DA energy market. The results also show that the potential to enhance profit for wind power producers is larger in the regulation down market than in the regulation up market.     

Short-term optimal wind power generation capacity in liberalized electricity markets

Mainly because of environmental concerns and fuel price uncertainties, considerable amounts of wind-based generation capacity are being added to some deregulated power systems. The rapid wind development registered in some countries has essentially been driven by strong subsidizing programs. Since wind investments are commonly isolated from market signals, installed wind capacity can be higher than optimal, leading to distortions of the power prices with a consequent loss of social welfare. In this work, the influence of wind generation on power prices in the framework of a liberalized electricity market has been assessed by means of stochastic simulation techniques. The developed methodology allows investigating the maximal wind capacity that would be profitably deployed if wind investments were subject to market conditions only. For this purpose, stochastic variables determining power prices are accurately modeled. A test system resembling the size and characteristics of the German power system has been selected for this study. The expected value of the optimal, short-term wind capacity is evaluated for a considerable number of random realizations of power prices. The impact of dispersing the wind capacity over statistical independent wind sites has also been evaluated. The simulation results reveal that fuel prices, installation and financing costs of wind investments are very influential parameters on the maximal wind capacity that might be accommodated in a market-based manner.     

考虑风电并网的分时段短期电价预测

考虑了并网风电量对电价影响,并将相关系数作为选取电价影响因素的标准,考虑了历史电价、负荷、并网风电量与负荷的比值等影响电价的因素。分别将负荷与历史清算电价,等效负荷与历史清算电价,负荷、并网风电量与负荷的比值及历史清算电价作为神经网络的输入因子对市场清算电价进行分时段预测。算例采用丹麦电力市场的历史数据,分别对其2010年并网风电量所占比例较大和较小的日期进行预测,验证了选择负荷、并网风电量与负荷的比值及历史清算电价作为预测神经网络的输入变量是恰当的,其预测精度能够满足电力市场实际运行的需要。     

Where the wind blows: Assessing the effect of fixed and premium based feed-in tariffs on the spatial diversification of wind turbines

Feed-in tariffs (FIT) are among the most important policy instruments to promote renewable electricity production. The fixed-price FIT (FFIT), which guarantee a fixed price for every unit of produced electricity and the premium based FIT (PFIT), which pay a premium on top of the market price are commonly implemented in the EU. Costs for balancing intermittent electricity production may be significantly higher with FFIT than with PFIT, and FFIT do not provide any incentive to produce electricity when marginal production costs are high. In contrast, PFIT do provide strong incentives to better match renewable power output with marginal production costs in the system. The purpose of this article is to assess the effects of the two tariff schemes on the choice of wind turbine locations. In an analytical model, we show that both the covariance between wind power supply and demand as well as between the different wind power locations matter for investors in a PFIT scheme. High covariance with other intermittent producers causes a decrease in market prices and consequently in revenues for wind power investors. They are therefore incentivized to diversify the locations of wind turbines to decrease the covariance between different wind power production locations. In an empirical optimization model, we analyze the effects of these two different schemes in a policy experiment for Austria. The numerical results show that under a PFIT scheme, (1) spatial diversification is incentivized, (2) the covariance of wind power production with marginal electricity production costs increases, and (3) the variances of the wind power output and of residual load decrease if wind power deployment attains 10% of total national electricity consumption.     

Large-scale integration of wind power into different energy systems

The paper presents the ability of different energy systems and regulation strategies to integrate wind power. The ability is expressed by the following three factors: the degree of electricity excess production caused by fluctuations in wind and Combined Heat and Power (CHP) heat demands, the ability to utilise wind power to reduce CO₂ emission in the system, and the ability to benefit from exchange of electricity on the market. Energy systems and regulation strategies are analysed in the range of a wind power input from 0 to 100% of the electricity demand. Based on the Danish energy system, in which 50% of the electricity demand is produced in CHP, a number of future energy systems with CO₂ reduction potentials are analysed, i.e. systems with more CHP, systems using electricity for transportation (battery or hydrogen vehicles) and systems with fuel-cell technologies. For the present and such potential future energy systems different regulation strategies have been analysed, i.e. the inclusion of small CHP plants into the regulation task of electricity balancing and ancillary grid stability services and investments in electric heating, heat pumps and heat storage capacity. The results of the analyses make it possible to compare short-term and long-term potentials of different strategies of large-scale integration of wind power.     

Heating with wind: Economics of heat pumps and variable renewables

With the growth of wind and solar energy in electricity supply, the electrification of space and water heating is becoming a promising decarbonization option. In turn, such electrification may help the power system integration of variable renewables, for two reasons: thermal storage could provide low-cost flexibility, and heat demand is seasonally correlated with wind power. However, temporal fluctuations in heat demand may also imply new challenges for the power system. This study assesses the economic characteristics of electric heat pumps and wind energy and studies their interaction on wholesale electricity markets. Using a numerical electricity market model, we estimate the economic value of wind energy and the economic cost of powering heat pumps. We find that, just as expanding wind energy depresses its €/MWh_el value, adopting heat pumps increases their €/MWh_el cost. This rise can be mitigated by synergistic effects with wind power, “system-friendly” heat pump technology, and thermal storage. Furthermore, heat pumps raise the wind market value, but this effect vanishes if accounting for the additional wind energy needed to serve the heat pump load. Thermal storage facilitates the system integration of wind power but competes with other flexibility options. For an efficient adoption of heat pumps and thermal storage, we argue that retail tariffs for heat pump customers should reflect their underlying economic cost.