Search Results (33)

Electricity markets with a high share of variable renewable energy require significant balancing reserves to ensure stability by preserving the balance of supply and demand. However, they were originally conceived for dispatchable technologies, which operate with predictable and controllable generation. As a result, adapting market mechanisms to accommodate the characteristics of variable renewables is essential for enhancing grid reliability and efficiency. This work studies the strategic behavior of a wind power producer (WPP) in the Iberian electricity market (MIBEL) and the Portuguese balancing markets (BMs), where wind farms are economically responsible for deviations and do not have support schemes. In addition to exploring current market dynamics, the study proposes new market designs for the balancing markets, with separate procurement of upward and downward secondary balancing capacity, aligning with European Electricity Regulation guidelines. The difference between market designs considers that the wind farm can hourly bid in both (New 1) or only one (New 2) balancing direction. The study considers seven strategies (S1–S7) for the participation of a wind farm in the past (S1), actual (S2 and S3), New 1 (S4) and New 2 (S5–S7) market designs. The results demonstrate that new market designs can increase the wind market value by 2% compared to the optimal scenario and by 31% compared to the operational scenario. Among the tested approaches, New 2 delivers the best operational and economic outcomes. In S7, the wind farm achieves the lowest imbalance and curtailment while maintaining the same remuneration of S4. Additionally, the difference between the optimal and operational remuneration of the WPP under the New 2 design is only 22%, indicating that this design enables the WPP to achieve remuneration levels close to the optimal case. Full article

Balancing markets (BMs) play a crucial role in ensuring the real-time equilibrium between electricity demand and supply. The current requirements for participation in BMs often overlook the characteristics and capabilities of variable renewables, limiting their effective integration. The increasing penetration of variable renewables necessitates adjustments in the design of BMs to support the transition toward carbon-neutral power systems. This study examines the levels of active market participation for a wind power producer (WPP) in the Iberian Electricity Market and the Portuguese BMs. In addition to exploring current market dynamics, the study tests one methodology proposed by the Danish Transmission System Operator to support the participation of variable renewables in BMs, the P90, and two new methods based on the full cost balancing concept. These methodologies incentivize WPPs to minimize imbalances by allowing market participation only if imbalances remain within a 10% deadband of annual hours (P90), hourly offers (D90), or both (DP90). The results indicate that participating in the secondary capacity market, particularly for downward capacity, is the most profitable strategy. This participation enhances the value of wind power by over 42%. However, in most methodologies, the WPP failed to deliver nearly 100% of its allocated capacity approximately 1% of the time. In contrast, the D90 approach limited the maximum deviation to 10%, demonstrating the highest reliability among the evaluated methods. Full article

The 2050 global ambition for a carbon-neutral society is increasing the penetration of the most competitive variable renewable technologies, onshore wind and solar PV. These technologies are known for their near-zero marginal costs but highly variable time-dependent generation. Power systems with major penetrations of variable generation need high balancing flexibility to guarantee their stability by maintaining the equilibrium between demand and supply. Electricity markets were designed for dispatchable technologies. Support schemes are used to incentivize and de-risk the investment in variable renewables, since actual market designs are riskier for their active participation. This study presents three strategic bidding strategies for the active participation of variable renewables in electricity markets based on probabilistic quantile-based forecasts. This case study examines the levels of active market participation for a wind power producer (WPP) in the Iberian electricity market and the Portuguese balancing markets, where WPPs are financially responsible for imbalances and operate without support schemes in the first and second stages of the Iberian market designs. Results from this study indicate that the WPP has the potential to increase its market value between 36% and 155% if participating in the tertiary and secondary balancing markets completely adapted to its design, respectively. However, considering the use of strategic bidding in actual market designs, by participating in the secondary reserve, the WPP can increase its market value by 10% and 45% when compared with perfect foresight and operational cases, respectively. Full article

For an electric company, having an accurate forecast of the expected electrical production and maintenance from its wind farms is crucial. This information is essential for operating in various existing markets, such as the Iberian Energy Market Operator—Spanish Hub (OMIE in its Spanish acronym), the Portuguese Hub (OMIP in its Spanish acronym), and the Iberian electricity market between the Kingdom of Spain and the Portuguese Republic (MIBEL in its Spanish acronym), among others. The accuracy of these forecasts is vital for estimating the costs and benefits of handling electricity. This article explains the process of creating the complete dataset, which includes the acquisition of the hourly information of four European wind farms as well as a description of the structure and content of the dataset, which amounts to 2 years of hourly information. The wind farms are in three countries: Auvergne-Rhône-Alpes (France), Aragon (Spain), and the Piemonte region (Italy). The dataset was built and validated following the CRISP-DM methodology, ensuring a structured and replicable approach to data processing and preparation. To confirm its reliability, the dataset was tested using a basic predictive model, demonstrating its suitability for wind energy forecasting and maintenance optimization. The dataset presented is available and accessible for improving the forecasting and management of wind farms, especially for the detection of faults and the elaboration of a preventive maintenance plan. Full article

Learning the dynamics of power prices in a given market is important for a number of players (e.g., producers, consumers, and policy makers) at both macro- and microeconomic levels. This paper analyzes the recent behavior of spot prices in eight Western European countries. The sample period coincides with the COVID-19 pandemic for the most part: it starts in April 2020 and runs until May 2023; it includes the start of the Russia–Ukraine war. We introduce a new model for the hourly spot price of electricity. The deterministic component includes yearly, weekly, and daily seasonalities; the stochastic component accounts for volatility, mean reversion, and discrete jumps. We estimate the model with publicly available hourly data. Regarding the development of the internal market for electricity, we find that core mainland power markets now move closer in step with one another than before, but the integration process of the Iberian Peninsula seems to have kicked into reverse. As for the dynamics of power prices, in the last part of the sample period the speed of reversion falls everywhere, and price volatility increases noticeably; the expected number of jumps per hour decreases, but their average size turns to positive and they become more volatile. Full article

Amidst the global energy crisis in 2022, the Spanish and Portuguese governments introduced a subsidy to natural gas (“the Iberian exception”), attempting to lower the wholesale electricity market prices, with the understanding that gas-fired-combined cycle gas turbines (CCGTs) are price-setting technologies most of the time, directly or indirectly. The subsidy succeeded in lowering the market price but induced several other effects, such as (1) the increase in cleared energy in the Spanish market (mostly produced with gas), (2) the bias in the import/export cross-border position between Spain and France (Spain became a net exporter to France immediately), or (3) the consequent increase in congestion rents, which serve to lightly finance the subsidy, among other effects. This paper provides a framework for clustering the different effects based on the market participation phases: the subsidy, the market bidding, the market results, and surplus and rents. Moreover, this paper builds on the theoretical market models, with and without subsidies, and with and without cross-border exchanges. Based on the real market bids, the subsidies, and the generators’ data, we reconstruct the supply and demand curves and simulate the counterfactual market scenarios in order to illustrate and quantify the effects. We highlight the quantification of the theoretical effect of the transfer of rents, from non-fossil to fossil fuel producers, induced by the gas subsidy. Full article

The liberalization of energy retail markets empowered consumers with the ability to be part of new emerging entities, such as Citizen Energy Communities. With the increasing penetration of decentralized variable generation, communities have the advantage of incentive local carbon neutrality and sustainability. Local generation reduces transport grid usage and costs to consumers. Furthermore, worldwide legislation incentives energy communities by providing them discounts to other fee parts of the tariff apart from wholesale prices. This paper presents a model of strategic behavior, investment, and trading of energy communities. The model comprises the investment in local renewable generation, the design of competitive tariffs, and strategic bidding on wholesale markets. Consumers have an optimization model that selects the retail tariff that minimizes their costs with energy. These models are tested using data from Portuguese consumers and the Iberian electricity market. Results from the study indicate that inflexible consumers may reduce their costs by 29% by being part of the community. Furthermore, they have the potential to reduce their costs above 50% when using demand–response, adapting themselves to local production and wholesale prices. Full article

The intermittent nature of the solar resource together with the fluctuating energy demand of the day-ahead electricity market requires the use of efficient long-term energy storage systems. The pumped hydroelectric storage ($PHS$) power plant has demonstrated its technical and commercial viability as a large-scale energy storage technology. The objective of this paper is to analyse the parameters that influence the mode of operation in conjunction with a floating photovoltaic ($FPV$) power plant under day-ahead electricity market conditions. This work proposes the analysis of two parameters: the size of the $FPV$ power plant and the total process efficiency of the $PHS$ power plant. Five $FPV$ plant sizes are analysed: $50\%$ ($S1$), $100\%$ ($S2$), $150\%$ ($S3$), $350\%$ ($S4$) and $450\%$ ($S5$) of the $PHS$ plant. The values of the total process efficiency parameter analysed are as follows: $0.77$ for old $PHS$ plants, and $0.85$ for more modern plants. The number of daily operating hours of the $PHS$ plant is 4 h. These 4 h of operation correspond to the highest prices on the electricity market. The framework of the study is the Iberian electricity market and the Alto Rabagão dam (Portugal). Different operating scenarios are considered to identify the optimal size of the $FPV$ power plant. Based on the measured data on climatic conditions, an algorithm is designed to estimate the energy production for different sizes of $FPV$ plants. If the total process efficiency is $0.85$, the joint operation of both plants with $FPV$ plant sizes $S2$ and $S3$ yields a slightly higher economic benefit than the independent mode of operation. If the total process efficiency is $0.77$, there is always a higher economic benefit in the independent operation mode, irrespective of the size of the $FPV$ plant. However, the uncertainty of the solar resource estimation can lead to a higher economic benefit in the joint operation mode. Increasing the number of operating hours of the $PHS$ plant above 4 h per day decreases the economic benefit of the joint operation mode, regardless of the total process efficiency parameter and the size of the $FPV$ plant. As the number of operating hours increases, the economic benefit decreases. The results obtained reveal that the coupling of floating photovoltaic systems with pumped hydroelectric storage power plants is a cost-effective and reliable alternative to provide sustainable energy supply security under electricity market conditions. In summary, the purpose of this work is to facilitate decision making on the mode of operation of both power plants under electricity market conditions. The case studies allow to find the optimal answer to the following practical questions: What size does the $FPV$ power plant have to be in order for both plants to be better adapted to the electricity market? What is the appropriate mode of operation of both plants? What is the economic benefit of changing the turbine pump of the $PHS$ power plant? Finally, how does the installation of the $FPV$ power plant affect the water volume of the upper reservoir of the $PHS$ plant? Knowledge of these questions will facilitate the design of $FPV$ power plants and the joint operation of both plants. Full article

This study identifies the optimal operational strategy for floating photovoltaic power plants and pumped hydroelectric power plants in the day-ahead Iberian electricity market. Different operating scenarios were analysed based on forecast accuracy in addition to any deviations occurring in the day-ahead market, taking into account the rules of the electricity market and the technical operational limitations of both plants. These scenarios show the choice between the independent mode of operation and the joint mode of operation of both plants. Five scenarios have been studied, with upward and downward deviations of $5\%$, $10\%$, $25\%$ and $50\%$ considered. These scenarios can be classified into two groups. If there are deviation penalties, group 1; or without deviation penalties, group 2. Scenarios 3 and 4 belong to the first group and scenarios 1, 2 and 5 to the second group. In the scenarios of the first group, the price deviations are used, and in the scenarios of the second group, the marginal market price is used. The economic benefit of the scenarios with deviation penalties is obtained in the joint operation mode of both plants. Economic benefits of up to 35% are obtained. In contrast, in the scenarios where there are no deviation penalties, the independent mode of operation is the optimum. The reason for this is the low efficiency of the pumping process. In this case, economic benefits of 1.6% are obtained. This study can be used to guide the decision-making process in the operation of both plants in order to maximise the economic benefit. Full article

Hydrogen is regarded as a flexible energy carrier with multiple applications across several sectors. For instance, it can be used in industrial processes, transports, heating, and electrical power generation. Green hydrogen, produced from renewable sources, can have a crucial role in the pathway towards global decarbonization. However, the success of green hydrogen production ultimately depends on its economic sustainability. In this context, this work evaluates the economic performance of a hydrogen power plant participating in the electricity market and supplying multiple hydrogen consumers. The analysis includes technical and economical details of the main components of the hydrogen power plant. Its operation is simulated using six different scenarios, which admit the production of either grey or green hydrogen. The scenarios used for the analysis include data from the Iberian electricity market for the Portuguese hub. An important conclusion is that the combination of multiple services in a hydrogen power plant has a positive effect on its economic performance. However, as of today, consumers who would wish to acquire green hydrogen would have to be willing to pay higher prices to compensate for the shorter periods of operation of hydrogen power plants and for their intrinsic losses. Nonetheless, an increase in green hydrogen demand based on a greater environmental awareness can lead to the need to not only build more of these facilities, but also to integrate more services into them. This could promote the investment in hydrogen-related technologies and result in changes in capital and operating costs of key components of these plants, which are necessary to bring down production costs. Full article

In recent years, there has been a significant increase in investment in renewable energy sources, leading to the decarbonization of the electricity sector. Accordingly, a key concern is the influence of this process on future electricity market prices, which are expected to decrease with the increasing generation of renewable power. This is important for both current and future investors, as it can affect profitability. To address these concerns, a long-term analysis is proposed here to examine the influence of the future electricity mix on Iberian electricity prices in 2030. In this study, we employed artificial intelligence forecasting models that incorporated the main electricity price-driven components of MIBEL, providing accurate predictions for the real operation of the market. These can be extrapolated into the future to predict electricity prices in a scenario with high renewable power penetration. The results, obtained considering a framework featuring an increase in the penetration of renewables into MIBEL of up to 80% in 2030, showed that electricity prices are expected to decrease by around 50% in 2030 when compared to 2019, and there will be a new pattern of electricity prices throughout the year due to the uneven distribution of renewable electricity. The study’s findings are relevant for ongoing research on the unique challenges of energy markets with high levels of renewable generation. Full article

In this paper, for the data set of the Iberian Electricity Market for the period 1 January 2015 to 30 June 2019, 19 different models are considered from econometrics, statistics, and artificial intelligence to explain how electricity markets work. This survey allows us to obtain a more complete, critical view of the most cited models. The machine learning models appear to be very good at selecting the best explanatory variables for the price. They provide an interesting insight into how much the price depends on each variable under a nonlinear perspective. Notwithstanding, it might be necessary to make the results understandable. Both the autoregressive models and the linear regression models can provide clear explanations for each explanatory variable, with special attention given to GARCHX and LASSO regression, which provide a cleaner linear result by removing variables that have a minimal linear impact. Full article

The European Union considers that offshore wind power will play a key role in making the EU the first climate-neutral continent by 2050. Currently, the potential of offshore wind energy is still untapped in Spain. Furthermore, the characteristics of the coastline in Spain require floating technology, making it challenging to install wind farms due to their current high cost. This work seeks to quantify the impact that Spanish offshore wind energy would have on the Iberian electricity market. Several offshore wind scenarios are evaluated by combining available information in relation to areas suitable for installing wind farms and wind resource data. The impact on the day-ahead electricity market has been obtained by reproducing the market, including these new offshore wind generation scenarios. The introduction of this renewable energy results in a market cost reduction in what is known as the merit-order effect. According to our estimates, for each MWh of offshore wind energy introduced in the market, there would be a market cost reduction of 45 €. These savings can serve as a reference for regulators to adjust their policy framework to boost floating wind offshore generation. Full article

The participation of household prosumers in wholesale electricity markets is very limited, considering the minimum participation limit imposed by most market participation rules. The generation capacity of households has been increasing since the installation of distributed generation from renewable sources in their facilities brings advantages for themselves and the system. Due to the growth of self-consumption, network operators have been putting aside the purchase of electricity from households, and there has been a reduction in the price of these transactions. This paper proposes an innovative model that uses the aggregation of households to reach the minimum limits of electricity volume needed to participate in the wholesale market. In this way, the Aggregator represents the community of households in market sales and purchases. An electricity transactions portfolio optimization model is proposed to enable the Aggregator reaching the decisions on which markets to participate to maximize the market negotiation outcomes, considering the day-ahead market, intra-day market, and retail market. A case study is presented, considering the Iberian wholesale electricity market and the Portuguese retail market. A community of 50 prosumers equipped with photovoltaic generators and individual storage systems is used to carry out the experiments. A cost reduction of 6–11% is achieved when the community of households buys and sells electricity in the wholesale market through the Aggregator. Full article

The installation of wind power technology is growing steadily and the trend can be expected to continue if the objectives proposed by the European Commission are to be achieved. In some countries a considerable percentage of installed wind power capacity is near the end of its useful lifetime. In the case of Spain, the figure is 50% within five years. Over the last 20 years, wind energy technology has evolved considerably and the expected capacity factor has improved, thus increasing annual energy production, and capital expenditure and operational expenditure have decreased substantially. This paper studies the optimal decision under uncertainty between life extension and full repowering for a generic wind farm installed in the Iberian Peninsula when the future hourly electricity prices and the capacity factor evolve stochastically and seasonally. The results show that in economic terms, full repowering is the best option, with a net present value of €702,093 per MW installed, while reblading is the second best option. The methodology can be transferred to other specific wind farms in different electricity markets and can be used to develop national wind energy policy recommendations to achieve projected shares in the electricity mix. Full article