Incentives to value the dispatchable fleet`s operational flexibility across energy markets

Abstract

To keep our planet livable, hundred and seventy-five nations worldwide, including Europe, have committed to drastically reducing greenhouse gas emissions. The work at hand participates with the energy transition toward decarbonized electricity production by providing a method to analyze the incentives for the thermal fleet to contribute. Given the liberalized economic environment Europe and other countries have put in place, the work at hand analyzes the signals set by the energy markets to investors and power plant operators regarding flexible power plant operation and the future requirement of power plant flexibilisation, with improvement suggestions. This work contributes to the field of energy system analysis and operations research. First, a methodological framework for quantitative, long-term, high-resolution techno-economic assessments of an individual power plant’s operational flexibility is put in place. Instead of relying on single metrics, this method uses the power plant’s unit commitment and economic dispatch for flexibility valuation. Depending on the desired insight, different metrics might be derived from the plant dispatch. The single unit, self-scheduling problem of a merchant power plant solved from a price-taker perspective developed in this work includes the intraday and frequency control markets, as well as a parametric power plant model suited for operational flexibility assessments. The model accounts, among others, for the degraded power plant efficiency at part-load. In addition, significant aspects, like the variation of start-up costs as a function of the market prices are included. Improved opportunity cost calculation methods including part-load efficiency degradation for the optimization of capacity reservation in the frequency control market are developed. Quantitative analyses demonstrate that comprehensive flexibility studies should include intraday and frequency control markets. The developed concepts might also be implemented in models solving other types of unit commitment problems than the single unit self-scheduling problem. The proposed formulations are suited for the state-of-the-art mixed integer programming approach. The work at hand, however, introduces an alternative approach. Acknowledging that the power plant operation is a controlled process with a finite number of states and transitions, the concept of events is used to overcome uniform time discretization. This event-based approach requires less computation time than time-discrete approaches when simulating long time horizons. The work’s practical relevance is illustrated in the retroactive observation of how the merchant power plants react to the markets in their operation strategies. The case studies show that the day-ahead markets incent a conventional power plant’s flexible operation at increased shares of renewables, but currently do not compensate for the profit difference resulting from this system-friendly dispatch. The analyzed frequency control and intraday markets help in improving the day-ahead…