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Market Design for a High-Renewables Electricity System
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Market Design for a High-Renewables Electricity System

A special issue of Energies (ISSN 1996-1073). This special issue belongs to the section "C: Energy Economics and Policy".

Deadline for manuscript submissions: closed (31 December 2019) | Viewed by 60748

Printed Edition Available!
A printed edition of this Special Issue is available here.

Special Issue Editor

Prof. Dr. Wadim Strielkowski

E-Mail Website
Guest Editor
1. Centre for Energy Studies, Prague Business School, Prague, Werichova 1145/29, 152 00 Prague, Czech Republic
2. Cambridge Institute for Advanced Studies, Cambridge, UK
Interests: energy economics; labor economics; tourism economics; international migration
Special Issues, Collections and Topics in MDPI journals

Special Issue Information

Dear Colleagues,

Recent targets for tackling climate change set up by most of the world’s governments envisage dramatic cuts in greenhouse gas emissions as well as an increase in the share of renewable energy in total gross energy production. However, in light of the above developments, it appears that the electricity sector will continue to bear the most significant burden stemming from economy-wide decarbonization, which, in turn, will require high shares of renewable energy sources (RES) in the electricity system. The good news is that technological progress in wind and solar energy coupled with the increased use of interconnection, hydro resources, new battery technologies, and the growing importance of smart meters and smart grids might make the high-renewables electricity system a realistic future scenario. Nevertheless, raising the share of RES will be challenging without substantial modifications to the current market design.

Our Special Issue will assess and evaluate emerging trends in the electricity markets, with a focus on the high-renewables electricity system. We will analyse such issues as wind and solar energy, interconnection, smart meters, smart grids of the future (including their social implications), and peer-to-peer (P2P) electricity trading that is closely connected to the principle of a sharing economy. One of the main issues the Special Issue wants to tackle is how the market design for a high-renewables electricity system would be different from the classical post-liberalisation market design.

In addition, our Special Issue wants to contemplate the problem of how to encourage penetration of RES at electricity markets with the help of policies targeted at promoting renewables on the supply and demand sides in order to address external benefits of renewables. Support for RES should integrate public preferences, and these can be addressed by assessing willingness-to-pay (WTP) for renewable energy sources. Policies to promote renewables closely interact with other climate change mitigation efforts in the energy sector such as energy efficiency improvements in demand and supply and therefore should be developed taking into account energy and climate targets.

Prof. Dr. Wadim Strielkowski
Guest Editor

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Keywords

  • electricity markets 
  • renewable energy 
  • decarbonization 
  • energy policy 
  • smart grids 
  • peer-to-peer electricity market 
  • wholesale market design 
  • electricity storage

Published Papers (16 papers)

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Research

20 pages, 2867 KiB  
Article
Renewable Energy and EU 2020 Target for Energy Efficiency in the Czech Republic and Slovakia
by Jacek Brożyna, Wadim Strielkowski, Alena Fomina and Natalya Nikitina
Energies 2020, 13(4), 965; https://doi.org/10.3390/en13040965 - 21 Feb 2020
Cited by 41 | Viewed by 4430
Abstract
Our paper focuses on the renewable energy and EU 2020 target for energy efficiency in the Czech Republic and Slovakia. We study the reduction of greenhouse gas (GHG) emissions in these two EU Member States through the prism of the Europe 2020 strategy [...] Read more.
Our paper focuses on the renewable energy and EU 2020 target for energy efficiency in the Czech Republic and Slovakia. We study the reduction of greenhouse gas (GHG) emissions in these two EU Member States through the prism of the Europe 2020 strategy and the 3 × 20 climate and energy package and economic growth (represented by the Gross Domestic Product (GDP) that allows to measure the national dynamics and provide cross-country comparisons) without attributing specific attention to issues such as the electrification of transport or heating, and thence leaving them outside the scope of this paper. Both Czech Republic and Slovakia are two post-Communist countries that still face the consequences of economic transformation and struggle with the optimal management of natural resources. Both countries encountered profound system transformation after 1989 that are apparent in all three measures of sustainable development used in our study. We show that it is unlikely that the planned increase in renewable energy in the Czech Republic and Slovakia will reach its targets, but they might succeed in reducing their energy consumption and greenhouse gas emissions. Our findings show that the energy intensity of Czech and Slovak economies increased in the early 2000s and then stabilized at a level about twice of the EU average. It appears that this value is likely to remain the same in the forthcoming years. However, implementation of GHG emissions in the Czech Republic and Slovakia may be at risk in case the proper energy policy is not maintained. Moreover, our results show how the increase in the share of renewable energy and improvement in energy efficiency go hand-in-hand with mining and exploiting the energy sources that is notorious for the transition economies. We also demonstrate that a proper energy policy is required for effectively reducing energy consumption and greenhouse gas emissions. There is a need for commitments made by relevant stakeholders and policymakers targeted at achieving sustainable economic growth and energy efficiency. In addition, we demonstrate that there is a need for maintaining a proper balance between economic development and environmental protection, which is a must for the EU sustainable energy development agenda and all its accompanying targets for all its Member States. Full article
(This article belongs to the Special Issue Market Design for a High-Renewables Electricity System)
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14 pages, 2659 KiB  
Article
Husk Energy Supply Systems for Sunflower Oil Mills
by Valerii Havrysh, Antonina Kalinichenko, Grzegorz Mentel, Urszula Mentel and Dinara G. Vasbieva
Energies 2020, 13(2), 361; https://doi.org/10.3390/en13020361 - 11 Jan 2020
Cited by 27 | Viewed by 3864
Abstract
Together with solar, wind, and hydro renewable energy sources (RES), biomass constitutes an integral part of the high-renewables electricity systems. Considerable feedstocks for electricity generation are process-based residues. Ukraine is the world leader in sunflower seed production, therefore, husk (a by-product of oil [...] Read more.
Together with solar, wind, and hydro renewable energy sources (RES), biomass constitutes an integral part of the high-renewables electricity systems. Considerable feedstocks for electricity generation are process-based residues. Ukraine is the world leader in sunflower seed production, therefore, husk (a by-product of oil production) is a promising biofuel for combustion- based power plants. The plants consume primarily electricity and fossil fuels (natural gas or fuel oil) for steam production. Their usage affects the edible oil production cost and impacts on climate change. The above facts force us to look for alternatives. By-product (husk) utilization can reduce exhaustible energy consumption (fossil fuels and grid electricity) and mitigate climate change. The aim of the study is to make an energy and ecological assessment of biomass energy supply systems. Specifically, the electricity and heat consumption of Ukrainian sunflower oil mills is investigated. Different options of cogeneration systems are analyzed. The preferable mode of combustion-based husk combined heat and power plants is to meet their own heat demand and to sell surplus electricity. Relative gross income and carbon dioxide emission reductions are calculated. Our results show that husk utilization can meet electricity and heat requirements of edible plants. The surplus electricity may be sold to the grid. Husk combined heat and power plants may result in reduction of carbon dioxide by 200–300% and an increase of total income by 24.7–65.7% (compared to conventional energy supply systems). Full article
(This article belongs to the Special Issue Market Design for a High-Renewables Electricity System)
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17 pages, 1536 KiB  
Article
Internet of Energy (IoE) and High-Renewables Electricity System Market Design
by Wadim Strielkowski, Dalia Streimikiene, Alena Fomina and Elena Semenova
Energies 2019, 12(24), 4790; https://doi.org/10.3390/en12244790 - 16 Dec 2019
Cited by 54 | Viewed by 4638
Abstract
The growing importance of the Internet of Energy (IoE) brands the high-renewables electricity system a realistic scenario for the future electricity system market design. In general, the whole gist behind the IoE is developed upon a somewhat broader idea encompassing the so-called “Internet [...] Read more.
The growing importance of the Internet of Energy (IoE) brands the high-renewables electricity system a realistic scenario for the future electricity system market design. In general, the whole gist behind the IoE is developed upon a somewhat broader idea encompassing the so-called “Internet of Things” (IoT), which envisioned a plethora of household appliances, utensils, clothing, smart trackers, smart meters, and vehicles furnished with tiny devices. These devices would record all possible data from all those objects in real time and allow for a two-way exchange of information that makes it possible to optimize their use. IoT employs the Internet Protocol (IP) and the worldwide web (WWW) network for transferring information and data through various types of networks and gateways as well as sensor technologies. This paper presents an outline stemming from the implications of the high-renewables electric system that would employ the Internet of Energy (IoE). In doing so, it focuses on the implications that IoE brings into the high-renewables electricity market inhabited by smart homes, smart meters, electric vehicles, solar panels, and wind turbines, such as the peer-to-peer (P2P) energy exchange between prosumers, optimization of location of charging stations for electric vehicles (EVs), or the information and energy exchange in the smart grids. We show that such issues as compatibility, connection speed, and most notoriously, trust in IoE applications among households and consumers would play a decisive role in the transition to the high-renewables electricity systems of the 21st century. Our findings demonstrate that the decentralized approach to energy system effective control and operation that is offered by IoE is highly likely to become ubiquitous as early as 2030. Since it may be optimal that large-scale rollouts start in the early 2020s, some form of government incentives and funding (e.g. subsidies for installing wind turbines or solar panels or special feed-in-tariffs for buying renewable energy) may be needed for the energy market to make early progress in embracing more renewables and in reducing the costs of later investments. In addition, there might be some other alternative approaches aimed at facilitating this development. We show that the objective is to minimize the overall system cost, which consists of the system investment cost and the system operating cost, subject to CO2 emissions constraints and the operating constraints of generation units, network assets, and novel carbon-free technologies, which is quite cumbersome given the trend in consumption and the planned obsolescence. This can be done through increasing energy efficiency, developing demand side management strategies, and improving matching between supply and demand side, just to name a few possibilities. Full article
(This article belongs to the Special Issue Market Design for a High-Renewables Electricity System)
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18 pages, 2645 KiB  
Article
Research and Application of Continuous Bidirectional Trading Mechanism in Yunnan Electricity Market
by Xuguang Yu, Gang Li, Chuntian Cheng, Yongjun Sun and Ran Chen
Energies 2019, 12(24), 4663; https://doi.org/10.3390/en12244663 - 08 Dec 2019
Cited by 6 | Viewed by 2750
Abstract
To further promote market competition, enrich trading varieties, alleviate information asymmetry, and improve trading efficiency during electricity market reform in China, the continuous bidirectional transaction (CBT) was designed and applied in the Yunnan electricity market (YNEM), which is dominated by medium- and long-term [...] Read more.
To further promote market competition, enrich trading varieties, alleviate information asymmetry, and improve trading efficiency during electricity market reform in China, the continuous bidirectional transaction (CBT) was designed and applied in the Yunnan electricity market (YNEM), which is dominated by medium- and long-term power energy trading. The clearing model for the CBT with the goal of maximum social welfare is proposed in two bidding stages, including call auction (CA) and continuous double auction (CDA). Correspondingly, the integrated two-stage market clearing algorithm is also introduced to ensure the data consistency and business continuity. Finally, the analysis of the practical application shows that the proposed model, algorithm, and various key implementation strategies of the trading platform support the bidding and clearing of the CBT well. In addition, the research and application of CBT may also provide valuable insights for other electricity market construction. Full article
(This article belongs to the Special Issue Market Design for a High-Renewables Electricity System)
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21 pages, 2289 KiB  
Article
Electricity Market Empowered by Artificial Intelligence: A Platform Approach
by Yueqiang Xu, Petri Ahokangas, Jean-Nicolas Louis and Eva Pongrácz
Energies 2019, 12(21), 4128; https://doi.org/10.3390/en12214128 - 30 Oct 2019
Cited by 33 | Viewed by 5833
Abstract
Artificial intelligence (AI) techniques and algorithms are increasingly being utilized in energy and renewable research to tackle various engineering problems. However, a majority of the AI studies in the energy domain have been focusing on solving specific technical issues. There is limited discussion [...] Read more.
Artificial intelligence (AI) techniques and algorithms are increasingly being utilized in energy and renewable research to tackle various engineering problems. However, a majority of the AI studies in the energy domain have been focusing on solving specific technical issues. There is limited discussion on how AI can be utilized to enhance the energy system operations, particularly the electricity market, with a holistic view. The purpose of the study is to introduce the platform architectural logic that encompasses both technical and economic perspectives to the development of AI-enabled energy platforms for the future electricity market with massive and distributed renewables. A constructive and inductive approach for theory building is employed for the concept proposition of the AI energy platform by using the aggregated data from a European Union (EU) Horizon 2020 project and a Finnish national innovation project. Our results are presented as a systemic framework and high-level representation of the AI-enabled energy platform design with four integrative layers that could enable not only value provisioning but also value utilization for a distributed energy system and electricity market as the new knowledge and contribution to the extant research. Finally, the study discusses the potential use cases of the AI-enabled energy platform. Full article
(This article belongs to the Special Issue Market Design for a High-Renewables Electricity System)
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20 pages, 5430 KiB  
Article
Merit Order Effect Modeling: The Case of the Hellenic Electricity Market
by Stelios Loumakis, Eugenia Giannini and Zacharias Maroulis
Energies 2019, 12(20), 3869; https://doi.org/10.3390/en12203869 - 12 Oct 2019
Cited by 9 | Viewed by 4374
Abstract
A simple effective model is proposed for the day-ahead electricity market. The model considers the main factors which govern the process, predicts the seasonal and daily variation of electricity demand, renewable production, system marginal price, and merit order effect. The accuracy of the [...] Read more.
A simple effective model is proposed for the day-ahead electricity market. The model considers the main factors which govern the process, predicts the seasonal and daily variation of electricity demand, renewable production, system marginal price, and merit order effect. The accuracy of the model is increased by fitting to historic data of the Hellenic electricity market. During the period between October 2016 and December 2018, the Hellenic electricity market calculated explicitly the merit order effect using an innovative mechanism to directly charge the electricity suppliers (retailers). On the basis of the proposed model and the market recorded data, the effect of the renewable penetration on the wholesale Hellenic electricity prices is revealed. The model is further used to analyze the market future behavior when basic factors (electricity demand, conventional power, and renewable penetration) are known or estimated. The effect of merit order effect on the Hellenic legislation is discussed and the appropriate measures adopted by the Hellenic authorities are analyzed and evaluated. Full article
(This article belongs to the Special Issue Market Design for a High-Renewables Electricity System)
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16 pages, 1820 KiB  
Article
Efficient Methods of Market Pricing in Power Industry within the Context of System Integration of Renewable Energy Sources
by Evgeny Lisin, Galina Kurdiukova, Pavel Okley and Veronika Chernova
Energies 2019, 12(17), 3250; https://doi.org/10.3390/en12173250 - 23 Aug 2019
Cited by 7 | Viewed by 2451
Abstract
Currently, the majority of world economies (even those located in the sunbelt (+/− 35 degrees of latitude with good sunshine with low seasonality) uses various types of fossil fuels as the main source of energy for their economies. However, this represents a very [...] Read more.
Currently, the majority of world economies (even those located in the sunbelt (+/− 35 degrees of latitude with good sunshine with low seasonality) uses various types of fossil fuels as the main source of energy for their economies. However, this represents a very volatile and unsustainable strategy, since according to various estimates, the fossil fuel era will inevitably end as all carbon fuels are going to be spent in the next few centuries. Unlike traditional energy, renewable energy sources (RES) are not based on energy resources, but rather rely upon natural energy flows. With regard to its unique property, there has been an active construction of power plants of renewable energy and their gradual integration into national energy supply systems in recent decades. At the same time, the existing models of electricity markets were unprepared for their wide distribution. Hence, determination of the market value of energy generated by power plants using renewable energy sources becomes a particularly significant issue. This market value has to take into account the prevention of costs from the use of fossil fuels, as well as the resulting environmental benefits. Our paper proposes methods for solving this problem, contributing to the increase of economic efficiency of investment projects for the construction of renewable energy facilities and the formation of economic incentives for their propagation in energy supply systems. The proposed methods are based on the dynamic differentiation of tariffs for consumers with renewable energy sources depending on their structure of electricity consumption. Its effectiveness is demonstrated by calculating the cost of electricity for households located in the Krasnodar region using renewable energy sources. It is shown that this approach to the formation of tariffs for consumers allows the household to receive additional savings from the efficient use of energy installations on RES and energy storage devices in terms of alignment of the energy consumption schedule. This creates a significant incentive for households to use them and contributes to increasing the effectiveness of government renewable energy support programs, including by solving the acute problem of raising electricity tariffs from the grid. Full article
(This article belongs to the Special Issue Market Design for a High-Renewables Electricity System)
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17 pages, 1586 KiB  
Article
Using Biofuels for Highly Renewable Electricity Systems: A Case Study of the Jatropha curcas
by Petr Procházka, Luboš Smutka and Vladimír Hönig
Energies 2019, 12(15), 3028; https://doi.org/10.3390/en12153028 - 06 Aug 2019
Cited by 3 | Viewed by 3487
Abstract
Recent movements for the decarbonization of the electricity sector have become a priority for many countries around the world and will inevitably lead to the sharp decline of fossil-fuel-based energy. Energy from fossil fuels is to be replaced by renewable energy sources (RES), [...] Read more.
Recent movements for the decarbonization of the electricity sector have become a priority for many countries around the world and will inevitably lead to the sharp decline of fossil-fuel-based energy. Energy from fossil fuels is to be replaced by renewable energy sources (RES), although the transition will neither be cheap nor smooth. One sustainable and environmentally friendly alternative to fossil fuels and which will take a considerable share in the increasing supply of renewable energy resources is biofuels. There are various types of biofuels used in practice; however, biodiesels represent one of the most popular and widespread ones. This paper focuses as a case study on the byproducts of Jatropha curcas, a crop and a plant that is already used for biofuel production and which is subsequently employed in electricity generation in Jatropha curcas producing regions. This paper identifies the limitations and prospects of Jatropha curcas utilization. Also, Jatropha curcas is compared to other materials suitable for biomass generation. An economic analysis for a 2 MW biofuel powerplant was conducted incorporating various market-related risks. The study shows that at current prices, net profitability can be achieved using Jatropha curcas byproducts for producing electricity. Full article
(This article belongs to the Special Issue Market Design for a High-Renewables Electricity System)
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25 pages, 442 KiB  
Article
The Uncertain Bidder Pays Principle and Its Implementation in a Simple Integrated Portfolio-Bidding Energy-Reserve Market Model
by Dávid Csercsik, Ádám Sleisz and Péter Márk Sőrés
Energies 2019, 12(15), 2957; https://doi.org/10.3390/en12152957 - 01 Aug 2019
Cited by 4 | Viewed by 2132
Abstract
One reason for the allocation of reserves in electricity markets is the uncertainty of demand and supply. If the bias of the generation portfolio shifts from controllable generators to renewable sources with significantly higher uncertainty, it is natural to assume that more reserve [...] Read more.
One reason for the allocation of reserves in electricity markets is the uncertainty of demand and supply. If the bias of the generation portfolio shifts from controllable generators to renewable sources with significantly higher uncertainty, it is natural to assume that more reserve has to be allocated. The price of reserve allocation in European models is dominantly paid by the independent system operator in the form of long-term paid reserve capacities and reserve demand bids submitted to various reserve markets. However, if we consider a scenario where the significant part of generation is allocated in day-ahead auctions, the power mix is not known in advance, so the required reserves can not be efficiently curtailed for the ratio of renewables. In the current paper we analyze an integrated European-type, portfolio-bidding energy-reserve market model, which aims to (at least partially) put the burden of reserve allocation costs to the uncertain energy bidders who are partially responsible for the amount of reserves needed. The proposed method in addition proposes a more dynamic and adaptive reserve curtailment method compared to the current practice, while it is formulated in a computationally efficient way. Full article
(This article belongs to the Special Issue Market Design for a High-Renewables Electricity System)
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15 pages, 359 KiB  
Article
A Speculative Trading Model for the Electricity Market: Based on Japan Electric Power Exchange
by Jun Maekawa and Koji Shimada
Energies 2019, 12(15), 2946; https://doi.org/10.3390/en12152946 - 31 Jul 2019
Cited by 6 | Viewed by 3800
Abstract
Renewable energy sources produce less environmental impact and have little marginal cost. Thus, because of these characteristics, it is desirable to disseminate it for the purpose of economic efficiency. Because of the uncertainty in the supply of renewable energy and the special feature [...] Read more.
Renewable energy sources produce less environmental impact and have little marginal cost. Thus, because of these characteristics, it is desirable to disseminate it for the purpose of economic efficiency. Because of the uncertainty in the supply of renewable energy and the special feature of electricity as a good, such as merit order curve, introducing forward markets is an essential factor in a liberalized market. In European countries, which have already established several mechanisms for managing liquidity including markets with several timelines, the market liquidity invites the investor to perform some speculative action. We present a simple electric power market model to analyze the speculative actions of electricity suppliers and the price effect of such actions. Moreover, we found that the speculative action improves the inelasticity of the demand in electricity market. Full article
(This article belongs to the Special Issue Market Design for a High-Renewables Electricity System)
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15 pages, 813 KiB  
Article
Emissions Trading System of the European Union: Emission Allowances and EPEX Electricity Prices in Phase III
by Georg Wolff and Stefan Feuerriegel
Energies 2019, 12(15), 2894; https://doi.org/10.3390/en12152894 - 27 Jul 2019
Cited by 2 | Viewed by 2259
Abstract
The Emissions Trading System in the European Union was introduced to achieve the climate goal of reducing emissions by around 43% between 1990 and 2030. Accordingly, the costs of emission allowances are part of power generation and, by extension, the price of electricity. [...] Read more.
The Emissions Trading System in the European Union was introduced to achieve the climate goal of reducing emissions by around 43% between 1990 and 2030. Accordingly, the costs of emission allowances are part of power generation and, by extension, the price of electricity. Theoretical works thus suggest a positive relationship between the price of emission allowances and electricity. However, this has not been validated empirically for phase III of the Emissions Trading System in the short run as part of the price setting mechanism of electricity producers. Our evidence suggests an opposite effect: According to our empricial results, both European Power Exchange (EPEX) day-ahead and intraday markets are negatively affected during phase III. We further test for a potentially asymmetric influence with the help of quantile regressions. Altogether, the outcome has implications for policy-makers and calls for further attention by academics and policy-makers in the future design of the Emissions Trading System, especially under larger amount of renewables in the electricity system. Full article
(This article belongs to the Special Issue Market Design for a High-Renewables Electricity System)
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26 pages, 2072 KiB  
Article
A Q-Cube Framework of Reinforcement Learning Algorithm for Continuous Double Auction among Microgrids
by Ning Wang, Weisheng Xu, Weihui Shao and Zhiyu Xu
Energies 2019, 12(15), 2891; https://doi.org/10.3390/en12152891 - 26 Jul 2019
Cited by 14 | Viewed by 3062
Abstract
Decision-making of microgrids in the condition of a dynamic uncertain bidding environment has always been a significant subject of interest in the context of energy markets. The emerging application of reinforcement learning algorithms in energy markets provides solutions to this problem. In this [...] Read more.
Decision-making of microgrids in the condition of a dynamic uncertain bidding environment has always been a significant subject of interest in the context of energy markets. The emerging application of reinforcement learning algorithms in energy markets provides solutions to this problem. In this paper, we investigate the potential of applying a Q-learning algorithm into a continuous double auction mechanism. By choosing a global supply and demand relationship as states and considering both bidding price and quantity as actions, a new Q-learning architecture is proposed to better reflect personalized bidding preferences and response to real-time market conditions. The application of battery energy storage system performs an alternative form of demand response by exerting potential capacity. A Q-cube framework is designed to describe the Q-value distribution iteration. Results from a case study on 14 microgrids in Guizhou Province, China indicate that the proposed Q-cube framework is capable of making rational bidding decisions and raising the microgrids’ profits. Full article
(This article belongs to the Special Issue Market Design for a High-Renewables Electricity System)
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16 pages, 1144 KiB  
Article
Electricity Markets for DC Distribution Systems: Design Options
by Longjian Piao, Laurens de Vries, Mathijs de Weerdt and Neil Yorke-Smith
Energies 2019, 12(14), 2640; https://doi.org/10.3390/en12142640 - 10 Jul 2019
Cited by 2 | Viewed by 2952
Abstract
DC distribution systems (DCDSs) are a promising alternative to AC systems because they remove AC-DC conversions between renewable sources and loads. Their unique features compared to AC include low system inertia, strict power limits and power–voltage coupling. In a liberalised electricity market, merely [...] Read more.
DC distribution systems (DCDSs) are a promising alternative to AC systems because they remove AC-DC conversions between renewable sources and loads. Their unique features compared to AC include low system inertia, strict power limits and power–voltage coupling. In a liberalised electricity market, merely applying an AC market design to a DCDS cannot guarantee the latter’s supply security and voltage stability; new markets must be designed to meet DC challenges. This article identifies the key design options of DCDS electricity markets. To identify these options, we develop a comprehensive design framework for local electricity markets; to our knowledge, we provide the first such analysis. Whereas previous studies focus on separate aspects of DCDS markets, we widen the scope to include the role of market architecture and investigate the arrangements of sub-markets. As an illustration, we demonstrate three promising DCDS market designs that can be defined in our framework, and provide a first assessment of their performance. Full article
(This article belongs to the Special Issue Market Design for a High-Renewables Electricity System)
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23 pages, 3612 KiB  
Article
Novel Conceptual Architecture for the Next-Generation Electricity Markets to Enhance a Large Penetration of Renewable Energy
by Javier Rodríguez-García, David Ribó-Pérez, Carlos Álvarez-Bel and Elisa Peñalvo-López
Energies 2019, 12(13), 2605; https://doi.org/10.3390/en12132605 - 06 Jul 2019
Cited by 14 | Viewed by 4168
Abstract
A transition to a sustainable energy system is essential. In this context, smart grids represent the future of power systems for efficiently integrating renewable energy sources and active consumer participation. Recently, different studies were performed that defined the conceptual architecture of power systems [...] Read more.
A transition to a sustainable energy system is essential. In this context, smart grids represent the future of power systems for efficiently integrating renewable energy sources and active consumer participation. Recently, different studies were performed that defined the conceptual architecture of power systems and their agents. However, these conceptual architectures do not overcome all issues for the development of new electricity markets. Thus, a novel conceptual architecture is proposed. The transactions of energy, operation services, and economic flows among the agents proposed are carefully analysed. In this regard, the results allow setting their activities’ boundaries and state their relationships with electricity markets. The suitability of implementing local electricity markets is studied to enforce competition among distributed energy resources by unlocking all the potential that active consumers have. The proposed architecture is designed to offer flexibility and efficiency to the system thanks to a clearly defined way for the exploitation of flexible resources and distributed generation. This upgraded architecture hereby proposed establishes the characteristics of each agent in the forthcoming markets and studies to overcome the barriers to the large deployment of renewable energy sources. Full article
(This article belongs to the Special Issue Market Design for a High-Renewables Electricity System)
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24 pages, 1453 KiB  
Article
On the Stability of Energy-Only Markets with Government-Initiated Contracts-for-Differences
by Paul Simshauser
Energies 2019, 12(13), 2566; https://doi.org/10.3390/en12132566 - 03 Jul 2019
Cited by 36 | Viewed by 5785
Abstract
Rising levels of variable renewable energy (VRE) in Australia’s National Electricity Market have been driven by a 20% renewable energy target by 2020. This certificated renewable portfolio standard has successfully driven new investment, allocated risk amongst buy- and sell-side market participants and met [...] Read more.
Rising levels of variable renewable energy (VRE) in Australia’s National Electricity Market have been driven by a 20% renewable energy target by 2020. This certificated renewable portfolio standard has successfully driven new investment, allocated risk amongst buy- and sell-side market participants and met overall policy objectives. But a policy vacuum for achieving long-term CO2 emission targets post-2020 has led to sub-national and, potentially, national governments initiating contract-for-differences (CfDs) to drive further investment activity in new plant—with virtually no coordination between the jurisdictions. In a gross pool energy-only market setting, replacing on-market transactions between retailers and generators with off-market transactions between governments and generators may have unintended side-effects vis-à-vis market stability. In this article, an energy-only gross pool is modeled with rising levels of off-market government-initiated CfDs, with a specific focus on spot and forward contract market outcomes. Model results show that as VRE plant enters, coal plant exit, and on-market firm hedge contracts historically supplied by coal plant are progressively replaced by off-market CfDs. In the event, while a tractable equilibrium can be maintained in the spot market, shortages of “primary issuance” hedge contracts emerge in the forward market. Any shortage of hedge contract capacity is likely to raise forward contract price premiums above efficient levels, force price-elastic customers into accepting unwanted spot market exposures and may unintentionally foreclose non-integrated (2nd tier) energy retailers, all of which harms consumer welfare. A wide-ranging program of government CfDs may therefore not be compatible with an energy-only market design. Full article
(This article belongs to the Special Issue Market Design for a High-Renewables Electricity System)
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Article
Classification of Renewable Sources of Electricity in the Context of Sustainable Development of the New EU Member States
by Jacek Brożyna, Grzegorz Mentel, Eva Ivanová and Gennadii Sorokin
Energies 2019, 12(12), 2271; https://doi.org/10.3390/en12122271 - 13 Jun 2019
Cited by 14 | Viewed by 3728
Abstract
Climate change and awareness of the need to care for the environment have resulted in a global increase in the interest in renewable energy sources. The European Union (EU) is active in this respect and requires Member States to fulfill specific plans in [...] Read more.
Climate change and awareness of the need to care for the environment have resulted in a global increase in the interest in renewable energy sources. The European Union (EU) is active in this respect and requires Member States to fulfill specific plans in the transformation of their energy systems. We employed hierarchical cluster analysis in an attempt to distinguish those countries among the new EU Member States that increased their electrical capacity from renewable energy sources to the greatest extent while paying attention to their energy intensity. The analyses were conducted in two scenarios for both 2004 and 2016. The first scenario assumed an analysis of all known renewable energy sources, whereas in the second scenario, only renewable energy sources from wind and solar power plants were included. The division of analyses into these two variants showed the importance of the differences in the energy assessment of individual countries, depending on classification of renewable energy sources. We identified groups of countries where electrical capacity from renewable energy sources increased the most. Conducting analyses using two variants allowed distinguishing countries that based most of their renewable energy on modern renewable energy sources, such as solar and wind power plants. The inclusion of gross domestic product in the analyses allowed us to identify countries with the worst energy efficiency value. Full article
(This article belongs to the Special Issue Market Design for a High-Renewables Electricity System)
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