Distributed energy resources and the organized balancing market: A symbiosis yet? Case of three European balancing markets

Ksenia Poplavskaya, Laurens de Vries

Energy Policy · 2018 · 81 citations · 13 references

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TL;DR

Distributed energy resources (DER) are emerging as a viable alternative to conventional generation for providing balancing services, driven by technological advances and EU policy incentives. The paper investigates how design variables—such as auction configuration features and formal, administrative, and technical market aspects—affect DER access and participation in organized balancing markets. A comparative case study of Austria, Germany, and the Netherlands was conducted using a newly designed assessment framework to evaluate how each market’s design facilitates DER participation. The results show that flexible pooling conditions, higher bidding frequency, product resolution, and authorization of non‑precontracted bids significantly ease DER integration, yet the effects of different design variables can reinforce or neutralize each other, necessitating careful coordination to harmonize market design.

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.

References

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