Wholesale Power Market Research Articles

Renewable-battery hybrid power plants in congested electricity markets: Implications for plant configuration

Examining coupled renewable-battery power plants (“hybrids”) in congested areas provides insights into a future of increased wind and solar penetration. Our study focuses on two types of congested regions, Variable Renewable Energy (VRE)-rich Areas and Load Centers, and explores likely plant configuration choices for developers and transmission network planners. This paper examines how hybrid value, comprising energy and capacity value, varies by plant configuration and congested region type considering factors such as storage duration, battery degradation, and ability to charge from the grid. We select plant locations from across the seven main U.S. independent system operators (ISOs). Hybrid value for each configuration is computed based on profit-maximizing plant operation given perfect foresight, according to observed wholesale power market real time prices from 2018 to 2021. In VRE-rich Areas, the median increase in energy value from extending storage duration from one to 4 h is 29.4 % for solar and 26.8 % for wind, assuming low battery degradation costs and storage sized to 100 % of the plant's nameplate generation capacity. Increasing storage duration beyond 4 h does not substantially increase its value from energy markets, even in VRE-rich Areas. We find that solar hybrids reach a 90 % capacity credit with 4 h of storage, while wind hybrids require 8 h of storage, based on the capacity factor of each hybrid during the top 100 net load hours.

Effects of end-user participation under a TSO-DSO coordination scheme for Norway

This paper analyses the Norwegian Power System through a sequence of models that represents dynamics of the wholesale power market, distribution power network, end-users, and a coordination scheme between Transmission System Operators (TSOs) and Distribution System Operators (DSOs). The models assess the impact of end-user flexibility and TSO-DSO coordination on the power system’s operation, with an emphasis on two research questions: the extent to which flexibility from end-users affects the power system’s operation under the TSO-DSO coordination scheme, and the potential of the TSO-DSO coordination scheme in incentivizing end-users’ flexibility. The paper presents three scenarios, involving varying degrees of coordination and end-user participation that are modeled and applied to the entire Norwegian power system. The results indicate that active end-user participation in the power market with a TSO-DSO coordination scheme could enhance the flexibility of the power system and support redispatch, while attaining a 14.5% redispatch cost reduction and 0.33% total system cost reduction. These findings offer insights for power system stakeholders concerning the potential advantages and challenges associated with fostering end-user flexibility and further developing TSO-DSO coordination schemes.

Low voltage grid resilience: Evaluating electric vehicle charging strategies in the context of the grid development plan Germany

The ongoing transition to decentralized renewable energy sources and sector-coupled consumers is reshaping the energy system. Changes at lower grid levels can stress lines and transformers. Crucial for a successful local energy transition are grid relief measures. Battery electric vehicles contribute to higher loads on grid equipment but also offer flexibility. This paper assesses the influence of four different charging strategies for battery electric vehicles across five representative low-voltage grids based on the grid development plan in Germany for the years 2021, 2037, and 2045. Results indicate that grid stress, specifically capacity stress, will emerge by 2037 and 2045. Decentralized photovoltaic systems are the primary contributors to this stress due to high simultaneous generation. Up to nearly 20% of photovoltaic power may need to be curtailed in 2045, especially in rural grids during the summer, to prevent overloads.Charging strategies linked to wholesale power market prices can inadvertently lead to higher consumption-induced grid overloads, necessitating the consideration of local grid restrictions. Implementing grid-friendly charging strategies, such as reduced charging power or alignment with local photovoltaic production, can mitigate those grid overloads from almost 8% down to 0.11%. However, these charging strategies have limited impact on photovoltaic-induced overloads due to the low number of connected battery electric vehicles during the day.In summary, appropriate charging strategies can ease low-voltage grid stress and are suitable measures to manage the challenges of decentralized energy transition and battery-electric vehicle adoption.

How do uncertain renewable energy induced risks evolve in a two-stage deregulated wholesale power market

Integrating renewable power into power market transactions is significant in terms of achieving carbon peaking and carbon neutrality. However, the integration of intermittent renewable energy sources (RES) introduces instability into power generation and brings certain risks to deregulated power market transactions. This study aims to identify the risks arising from RES power integration and analyze how these risks transmit and evolve in deregulated power markets. A Cournot game model is constructed to analyze the generation decisions of a thermal power generation company (GENCO) and a wind power GENCO in a two-stage power market. According to the results, in the mid-to-long-term power market, an increase in the uncertainty of wind power generation (WPG) could reduce wind power supply, increase the clearing price and decrease the power demand. Then, in the spot power market, the increased uncertainty related to WPG might decrease the amount of wind power traded, increase the marginal generation cost of the thermal power GENCO, raise the clearing price, and reduce the market demand for power. Finally, the uncertainty related to wind power generation could result in diminished revenue for the wind power GENCO and a loss in overall social welfare in the two-stage power market transaction.

Развитие оптового рынка электрической энергии и мощности в контексте Федерального закона «Об электро- энергетике»

The wholesale electricity and capacity market is a sphere of circulation of special goods — electricity and capacity within the framework of the Unified Energy System of Russia within the boundaries of the single economic space of the Russian Federation with the participation of large producers and large buyers of electricity and capacity, as well as other persons who have received the status of a wholesaler market. Legislative regulation of the structure, mechanisms of trade in the wholesale market by the norms of the Federal Law of March 26, 2003 No. 35-FZ “On the Electric Power Industry” has undergone changes over a twenty-year history. The article provides an overview of the modern structure of the wholesale electricity and power market, examines historical changes, and describes the prospects for further development of the wholesale market model.

Endogenous Risk Management of Prosumers by Distributionally Robust Chance-Constrained Optimization

Distributed renewable energy sources owned by prosumers have been considered an effective way to fortify grid resilience, and enhance sustainability. However, prosumers serve their own interests, which are affected by their risk preferences. Moreover, their objectives are unlikely to align with those of the society. In contrast to the conventional assumption of constant and exogenous risk preference, we propose an alternative modeling framework in which prosumers endogenously determine their risk attitudes through optimization in the power sector with a day-ahead market and real-time imbalance settlement. The decisions made by prosumers and other participants in the wholesale power market are expressed as a Stackelberg leader-follower game, resulting in a mathematical program with equilibrium constraints. The problem is formulated in a distributionally robust chance-constrained framework to account for renewable generation uncertainty. We show that the effect of uncertainty can be mitigated in the market <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">if</i> prosumers are allowed to optimally determine their risk attitudes. We also examine the case of price-taking prosumers, in which consistent implications are obtained. Therefore, our work highlights the fact that endogenizing risk preferences can be a useful tool for managing risk in the power market.

New Business Models in the Energy Sector in the Context of Revolutionary Transformations

The relevance of the problem of improving business models in the energy industry has become especially acute in recent years due to the energy transition, the emergence of new energy production and consumption technologies, and the increase in environmental requirements for energy companies’ performance. The purpose of the study is to form recommendations for creating business models in energy companies that meet modern realities and ensure the sustainable development of the energy business in an environment that is characterized by increased uncertainty and aggressive competition. Based on the analysis of scientific publications and the systematization of industry cases, it is proved that business models in the energy sector are likely to transform in the following three aspects: implementation of green technologies as a response to the public demand for clean energy; spatial organization of production based on platforms and digital tools; and active implementation of customized knowledge-intensive services. This article discusses the development of the social investment concept, the key factors affecting its implementation in the energy sector and related industries, and its risks and limitations in the times of energy crises. It is justified that new business models require changes in energy market infrastructure and strategic management principles. In this regard, the authors developed recommendations for the adaptation of the wholesale and retail electricity and power market to the structural, technological, and economic transformations in the energy production and consumption areas. The main advantages, barriers, and ideas for the effective implementation of innovative business models in energy companies are verified through an expert survey.

Alberta's Renewable Energy Market: Developing Contract Issues

Governments and corporations around the world have increasingly demonstrated leadership in tackling climate change, resulting in new decarbonization policies and initiatives and new corporate environmental, social, and governance mandates. At the same time, wind and solar capital costs have decreased and new technologies, such as battery storage, are becoming more prevalent, thereby increasing the flexibility and utility of renewable energy generation. Developers and investors have already expended significant capital to further the development of renewable generation with, according to the International Energy Agency, renewable energy investment reaching its highest level ever in 2021 — $367 billion internationally. This trend is only expected to increase if the global decarbonization goals are to be realized. Within Canada, Alberta is at the forefront of renewable energy development due in part to its unique power industry structure — a deregulated, competitive, wholesale power market with non-discriminatory system access — which has attracted corporate off-takers and buoyed investment in renewable energy projects in the province, supported by corporate power purchase agreements. The pace of development is striking, and Alberta has rapidly become a preferred destination for renewable energy investment. The Alberta Electric System Operator says that 22 percent of the energy generated in Alberta in 2021 came from renewable energy sources. This is predictedto rise sharply — for instance, there are 61 solar projects currently under development in Alberta that could be completed by the middle of the decade. This article examines several emerging contracting and development challenges currently facing renewable energy projects in Alberta, and aims to provide concrete, practical advice on several discrete contractual issues. Topics covered include, among others: (1) force majeure issues faced by project developers; (2) diverse carbon offset/renewable attributes programs and implications for power purchase arrangements; (3) developments pertaining to ethical procurement, including forced labour and the use of tracing protocols; and (4) the need for increased flexibility in contractual arrangements to accommodate the pairing of wind and solar with storage resources. Although this article is based primarily on experiences gained while developing renewable energy projects in Alberta, the analyses and solutions presented can be applied in many jurisdictions.

Simulation of the operation of a gas turbine installation of a thermal power plant with a hydrogen fuel production system

The growth in demand for the production of heat and electricity requires an increase in fuel consumption by power equipment. At the moment, the most demanded thermal equipment for construction and modernization is gas turbine units. Gas turbines can burn a variety of fuels (natural gas, synthesis gas, methane), but the main fuel is natural gas of various compositions. The use of alternative fuels makes it possible to reduce CO2 and NOx emissions during the operation of a gas turbine. Under conditions of operation of thermal power plants at the wholesale power market, it becomes probable that combined cycle power units, designed to carry base load, will start to operate in variable modes. Variable operation modes lead to a decrease in the efficiency of power equipment. One way to minimize or eliminate equipment unloading is to install an electrolysis unit to produce hydrogen.In this article the technology of “Power to gas” production with the necessary pressure at the outlet of 30 kgf/cm2 (this pressure is necessary for stable operation of the fuel preparation system of the gas turbine) is considered. High cost of hydrogen fuel during production affects the final cost of heat and electric energy, therefore it is necessary to burn hydrogen in mixture with natural gas. Burning a mixture of 5% hydrogen fuel and 95% natural gas requires minimal changes in the design of the gas turbine, it is necessary to supplement the fuel preparation system (install a cleaning system, compression for hydrogen fuel). In addition, the produced hydrogen can be stored, transported to the consumer. For the possibility of combustion of a mixture of natural gas and hydrogen fuel in a gas turbine the methodology of calculation of thermodynamic properties of working bodies developed by a team of authors under the guidance of Academician RAS (the Russian Academy of Sciences) V.E. Alemasov has been adapted, resulting in a program that allows to obtain an adequate mathematical model of the gas turbine. The permissible range of the working body temperature is limited to 3000 K. This paper presents the developed all-mode mathematical model of a gas turbine.On the basis of mathematical modeling of a gas turbine, a change in the main energy and environmental characteristics is shown depending on the composition of the fuel gas. Adding 5% hydrogen to natural gas has little effect on the gas turbine air treatment system, the flow rate remains virtually unchanged. CO2 emissions decrease, but there is an increase in the amount of H2O in the turbine exhaust gases.

Tackling “Transmission III”—Problems in 2022 for the Renewable Generation Backlog

Transmission III? I use that term to describe what publication Law360 signaled as one of the key energy policy issues to watch in 2022: how to overhaul the Federal Energy Regulatory Commission's (FERC's) transmission rules to accommodate increasing amounts of renewable energy coming from interior parts of the country with significant levels of wind and solar energy—but few large population centers. The FERC is facing a new interstate transmission problem, as existing US interstate transmission networks were built to serve other purposes. Transmission I, as I call it, arose to provide interstate electric grid system reliability and resilience for state‐regulated, vertically integrated electric utilities after the famous East Coast blackout of November 1965. Transmission II followed in the wake of the regional wholesale power market development, which arose after the mid‐1990s, to avoid the higher electricity costs arising when transmission congestion kept low‐cost generating plants from contributing to intrastate regional power grids.

Blockchain and Federated Learning Based Bidding Applications in Power Markets

Currently, power generators are facing an imperfectly competitive power market with relatively limited information, and they can increase their own economic returns by raising their quotations through game theory, which leads to an inflated price in the wholesale power market. In this paper, we propose a bidding application for the wholesale power market called Federated Learning Power Quotation System (FedLPQS), which combines federated learning and blockchain to consider the characteristics of the future power trading market of ”Liberalizing both ends”. FedLPQS using federated learning aggregates cost data of each power plant to achieve a certain degree of transparency and records the data in a blockchain platform based on the consortium chain to reduce the price of power traded in the wholesale power market.

Country-Specific Aspects of Operations of Wholesale Power and Capacity Markets

The modern energy sector, in both the Russian Federation and other countries, features the so-called “finer points,” the challenging issues addressed in many analytical documents as well as in published research. The paper discusses key electric power market developments in different countries, the dynamics of indicators measuring their performance, the results of actions taken to date, as well as the approaches to their regulation and influencing the quality of power supplied. We consider the main features of the adopted regulatory models and the basic principles adhered to by electric utilities as means of successful expansion planning and operation under given conditions. The purpose of this research is to study individual elements of operations of energy markets and the features of regulation as applied to the models originating from abroad and from domestic wholesale electricity and capacity markets. The study also takes into account the technology-related aspects such as the level of reliability of the power system. The study outlines the development vector for the effective operation of generating companies in a given context. The focus is on the areas with the highest potential in terms of contributing to growth. The scope of the paper also covers an overview of key trends of electricity market operations, both as practiced abroad and in this country. We present market models and discuss different approaches to determining the level of quality and reliability of electric power supply.

Project developer options to enhance the value of solar electricity as solar and storage penetrations increase

Increasing the penetration of photovoltaics (PV) reduces the marginal grid value of PV electricity. The declining grid value of PV with higher penetration could limit the technology’s economic attractiveness and future demand. Various strategies have been proposed for preserving this value. Using a consistent framework, we analyze the net value (accounting for both cost and grid value) of more than ten strategies in the United States. Here, grid value is estimated from coincident wholesale power market prices and PV generation using observed historical prices or modeled future prices with up to 30% PV penetration. We find that established and emerging strategies designed to shift the timing of standalone PV generation at the expense of total generation—including orienting monofacial PV modules west or bifacial modules vertically—result in minor net-value benefits or penalties. Adding energy storage to such systems magnifies the net-value loss, because configurations that change the timing of PV production become redundant when the energy-shifting capabilities of storage are added. The largest net-value gains come from strategies that maximize generation (solar tracking plus oversized PV arrays) in conjunction with storage, especially at high PV penetrations. PV systems are long-lived assets. Our results suggest that efforts to promote generation-maximizing strategies today may yield increasing net-value benefits as PV and storage deployments continue to accelerate in the United States over the coming decades.

Role of Government Institutions in National Energy Policy1

As readers of this column are aware, the Federal Energy Regulatory Commission (FERC), is an independent agency organized within the US Department of Energy (DOE) and critically important in articulating and implementing federal energy policy. FERC provides the leadership necessary in establishing wholesale power market rules and supporting private sector investment in infrastructure development, and in market valuation and pricing of assets in energy markets. The impetus introducing competition in electricity markets began in 1978 with enactment of the Public Utility Regulatory Policies Act (PURPA). PURPA required that vertically integrated utilities—owning generation, transmission and distribution—purchase power from generators/producers that could produce electricity at a cost that was less than the utility's avoided cost (the cost at which the utility itself could have generated electricity). PURPA provided the opportunity for competition in generation where non‐utility independent power producers could build, operate, and compete with existing utility power generation.

The Zonal and Seasonal CO2 Marginal Emissions Factors for the Italian Power Market

This paper estimates the seasonal and zonal \({\mathrm{CO}}_{2}\) marginal emissions factors (MEFs) from electricity production in the Italian electricity system. The inclusion of the zonal configuration of the Italian wholesale power market leads to a complete measurement of marginal emission factors which takes into account the heterogeneous distribution of RES power plants, their penetration rate and their variability within the zonal power generation mix. This article relies on a flexible econometric approach that includes the fractional cointegration methodology to incorporate the typical features of long-memory processes into the estimation of MEFs. We find high variability in annual MEFs estimated at the zonal level. Sardinia reports the highest MEF (0.7189 \({\mathrm{tCO}}_{2}\)/MWh), followed by the Center South (0.7022 \({\mathrm{tCO}}_{2}\)/MWh), the Center North (0.4236 \({\mathrm{tCO}}_{2}\)/MWh), the North (0.2018 \({\mathrm{tCO}}_{2}\)/MWh) and Sicily (0.146 \({\mathrm{tCO}}_{2}\)/MWh). The seasonal analysis also shows a large variability of MEFs in each zone across time. The heterogeneity of results leads us to recommend that policymakers consider the zonal configuration of the power market and the large seasonal variability related to carbon emissions and electricity generation when designing incentives for renewable energy sources expansion and for achieving emission reduction targets.

Central and Eastern European CO2 Market—Challenges of Emissions Trading for Energy Companies

The aim of this article was to identify challenges of emissions trading that the Polish and CEE Central and Eastern Europe energy industry will face, as well as to indicate key implications for the competitiveness of the companies from the energy sector resulting from that trading. The EU Emissions Trading Scheme (ETS) is the emissions trading system, which results from the EU policy concerning climate change. It is a tool for reducing greenhouse gas emissions (GHG). The system regulates an annual allocation of the allowances. The price of CO2 emission allowances is subject to constant fluctuations because it depends on various macroeconomic factors as well as is an effect of proprietary trading by global investment banks. Polish energy companies have an increasing share in the emission of CO2 in the European market. This is due to the fact that other European countries are rapidly moving away from fossil fuel-fired sources. The cost per MWh related to CO2 price has been growing in the last 10 years from ca. 5 up to 30 EUR/MWh at the beginning of 2021. From an electric power utilities perspective, the ability to set up a proper strategy in trading CO2 will be crucial to be competitive in the wholesale power market. The higher price of CO2 (and electric power) at the domestic market in relation to more green (more renewable energy sources RES in energy mix) surrounding countries translates into a worse competitive position.

ACCESSING THE EFFECT OF RENEWABLES ON THE WHOLESALE POWER MARKET

The purpose of this paper is to examine how rising wind energy generation (in MWh) impact the wholesale power market's volatility (in SEK) across four bidding regions in Sweden. Prior investigations show that though the increase in electricity production from wind energy lowers the average day-ahead electricity wholesale prices, however, uncertainty and volatility of market price could rise due to wind energy's intermittent nature. This study results show that Swedish power market experiences higher price volatility in long-run frequency when the generation of wind electricity increases. The reason for this high and volatile electricity price might be found from inflexible baseload power generation. The paper further suggests that volatility in the Swedish power market could be increased due to ambitious renewable electricity target by the Swedish government. The analysis concludes by providing the evidence that further adjustment in regard to the energy and regulatory policies might foster the better integration of a higher share of renewables into the power system.Keywords: Renewable Electricity, Wind Energy, Electricity Market, Price Volatility, Regulatory PoliciesJEL Classification: Q470DOI: https://doi.org/10.32479/ijeep.10756

Congestion Management and Demand Side Response in Wholesale Power Market

Congestion Management and Demand Side Response in Wholesale Power Market

An incentive mechanism for generation capacity investment in a price-capped wholesale power market

In electricity markets, market rules such as price caps defer proper investment in generation. The resulting generation mix is therefore sub-optimal if compared to the one that maximizes social welfare. In this paper, an incentive mechanism for a price-capped multi-area energy only market is proposed. The market model is posed as a mixed complementarity problem using the optimality conditions of all the individual players that participate in the multi-area electricity market. The resulting equilibrium problem is solved using a decomposition approach based on the Alternating Direction Method of Multipliers. The proposed solution algorithm takes advantage of the multi-area structure of the problem and outperforms state-of-the-art practices for solving these types of problems.

RENEWABLE ENERGY CERTIFICATES: APPLICATION POTENTIAL AND EFFIENCY

At the international level, the problem of the need to increase the contribution of renewable energy sources to domestic electricity demand is highly relevant. Since the production of renewable energy sources is quite expensive, many countries are developing various state and market incentives for investment in such energy sources. One such incentive is renewable energy certificates. The role of these certificates in the development of global renewable energy markets is invaluable. They not only help businesses achieve their goals in the field of renewable energy, but also reduce consumer payments for other renewable energy development programs. This article analyzes the current trends in the use of renewable energy certificates in the world and identifies the prospects for their use in the Russian Federation. In addition, the author of the article studied the issue of cost-effectiveness of renewable certificates. In order to assess the positive economic impact of the application of the certification system, calculations have been made to reduce the financial burden on participants in the Wholesale Electricity and Power Market by taking into account the funds received from the sale of these certificates to reduce payments by market participants to generators based on renewable sources under the program of agreements on the provision of capacity for generating objects operating on the basis of renewable energy sources, from the date of the start of supply of electric energy and of the last planned facility until the date of the last payment under the power capacity agreement. In addition, the author of the article studied the need for renewable energy certificates not only to obtain reliable data on the use of renewable energy sources, but also to create efficient electricity markets using renewable energy sources around the world.