The Effects of Stochastic Electricity Market Modelling on Estimating Additional Costs of Intermittent RES-E Integration

In this paper a stochastic fundamental electricity market model is developed. 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. In order to obtain appropriate estimates of the costs of intermittent renewable energy sources for electricity production (RES-E) notably reduced efficiencies at part load, start-up costs and reserve power requirements are taken into account. Since hydro storage is of high relevance when analysing intermittent resources, time-coupling constraints are considered. The system is considered to adapt on increasing RES-E over time by endogenous modelling of investment decisions in conventional power plants. To explicitly account for intermittent electricity production the fundamental modelling approach is extended by introducing a stochastic recombining tree. Exemplary results are presented for a German case study. It is shown that the costs of wind’s intermittency are underestimated in deterministic models. The proposed stochastic model, however, can give far more realistic estimates as e.g. the decreasing capacity credit with increasing installed wind capacities can sufficiently be modelled.