An Electricity Market Model to Estimate the Marginal Value of Wind in an Adapting System

Abstract-In this paper a stochastic fundamental electricity market model is presented. The model's principle is cost minimization by determining the marginal system costs mainly as a function of available generation and transmission capacities, primary energy prices, plant characteristics and electricity demand. To obtain appropriate estimates of the marginal value of wind in an adapting system notably reduced efficiencies at part load, start-up costs and reserve power requirements are taken into account. The intermittency of wind is covered by a stochastic recombining tree and the system is considered to adapt on increasing wind integration over time by endogenous modeling of investments in thermal power plants. Exemplary results are presented for a German case study

Distribution of costs induced by the integration of RES-E power

This article focuses on the distribution of costs induced by the integration of electricity generation from renewable energy sources (RES-E). The treatment to distribute these costs on different market actors is crucial for its development. For this purpose, individual actors of electricity markets and several cost categories are identified. According to the defined cost structure, possible treatments to distribute the individual cost categories on different relevant actors are described. Finally, an evaluation of the cost distribution treatments based on an economic analysis is given. Economic efficiency recommends that clearly attributable (shallow) grid connection as well as (deep) grid costs are charged to the corresponding RES-E producer and that the RES-E producers are also charged the regulating power costs. However, deep grid integration costs should be updated to reflect evolving scarcities. Also regulating power costs should reflect actual scarcity and thus be symmetric and based on real-time prices, taking into account the overall system imbalance. Moreover, the time span between the closure of the spot market and actual delivery should be chosen as short as possible to enable accurate RES-E production forecasts.

Conditions and costs for renewables electricity grid connection: Examples in Europe

This paper compares conditions and costs for RES-E grid connection in selected European countries. These are Germany, the Netherlands, the United Kingdom, Sweden, Austria, Lithuania and Slovenia. Country specific case studies are presented for wind onshore and offshore, biomass and photovoltaic power systems, as based on literature reviews and stakeholder interviews. It is shown that, especially for wind offshore, the allocation of grid connection costs can form a significant barrier for the installation of new RES-E generation if the developer has to bear all such costs. If energy policy makers want to reduce the barriers for new large-scale RES-E deployment, then it is concluded that the grid connection costs should be covered by the respective grid operator. These costs may then be recouped by increasing consumer tariffs for the use of the grid