On integrating large shares of variable renewables into the electricity system

In recent years increasing shares of variable RES (renewable energy sources) have changed the structure of electricity markets in Western Europe, especially in Germany. The core objective of this paper is to provide insights on the conditions to integrate even larger quantities of variable RES into the electricity system by using market-based principles and how, straightforward, a sustainable electricity system could work. Our major finding is that we suggest a market-based approach to ensure that competitive forces rather than governmental interferences as capacity mechanisms shape the future of the energy system. The major conclusions of this analysis are: The transition towards a competitive and sustainable future electricity system will be based on an approach of “new thinking” which is to accept a paradigm shift in the whole electricity system. This includes switching to a more flexible and smarter system allowing a greater scope for demand participation, storage options and other flexibility measures. Developing such a system implies also that no politically motivated capacity mechanisms are needed.

[1]  A. J. López,et al.  The electricity prices in the European Union. The role of renewable energies and regulatory electric market reforms , 2012 .

[2]  Thomas Hamacher,et al.  Integration of wind and solar power in Europe: Assessment of flexibility requirements , 2014 .

[3]  A. Tomasgard,et al.  Demand side operational flexibility - a holistic stochastic optimization model for flexible consumers and prosumers , 2013 .

[4]  P. Cramton.  Electricity market design , 2017 .

[5]  W. D. Walls,et al.  Power plant investment in restructured markets , 2007 .

[6]  C. Batlle,et al.  Impacts of Intermittent Renewables on Electricity Generation System Operation , 2012 .

[7]  Cristian Carraretto,et al.  Interaction among competitive producers in the electricity market: An iterative market model for the strategic management of thermal power plants , 2006 .

[8]  Peter Lund,et al.  Review of energy system flexibility measures to enable high levels of variable renewable electricity , 2015 .

[9]  P. A. Østergaard,et al.  Electricity market auction settings in a future Danish electricity system with a high penetration of , 2011 .

[10]  Milos Pantos,et al.  Market-based congestion management in electric power systems with increased share of natural gas dep , 2011 .

[11]  Leibniz-Informationszentrum Wirtschaft.  The merit-order effect: a detailed analysis of the price effect of renewable electricity generation on spot market prices in Germany , 2007 .

[12]  Jean-Michel Glachant,et al.  Large-scale wind power in electricity markets , 2010 .

[13]  Brian Vad Mathiesen,et al.  Large-scale integration of wind power into the existing Chinese energy system , 2011 .

[14]  P. Lund.  Boosting new renewable technologies towards grid parity – Economic and policy aspects , 2011 .

[15]  The future design of electricity markets: capacity payments or smart solutions? , 2014 .

[16]  H. Auer,et al.  The prerequisites for effective competition in restructured wholesale electricity markets , 2006 .

[17]  Elisa Trujillo-Baute,et al.  Impacts of Intermittent Renewable Generation on Electricity System Costs , 2015 .

[18]  R. Newman.  Promotion of the use of energy from renewable sources , 2014 .

[19]  T. J. Hammons.  Integrating renewable energy sources into European grids , 2008 .

[20]  Ghassan Zubi,et al.  Technology mix alternatives with high shares of wind power and photovoltaics—case study for Spain , 2011 .

[21]  Ana Estanqueiro,et al.  Impacts of large amounts of wind power on design and operation of power systems, results of IEA collaboration , 2008 .

[22]  Asgeir Tomasgard,et al.  Prosumer bidding and scheduling in electricity markets , 2016 .

[23]  Henrik Lund,et al.  Large-scale integration of wind power into different energy systems , 2005 .

[24]  Brian Vad Mathiesen,et al.  From electricity smart grids to smart energy systems – A market operation based approach and understanding , 2012 .

[25]  P. Ferrao,et al.  The impact of demand side management strategies in the penetration of renewable electricity , 2012 .

[26]  S. Stoft.  Power System Economics: Designing Markets for Electricity , 2002 .

[27]  Hans Auer,et al.  Chapter 5 – The Growing Impact of Renewable Energy in European Electricity Markets , 2013 .

[28]  Aleksandra Roos,et al.  Modeling Consumer Flexibility of an Aggregator Participating in the Wholesale Power Market and the Regulation Capacity Market , 2014 .

[29]  H. Lund.  Renewable Energy Systems: A Smart Energy Systems Approach to the Choice and Modeling of 100% Renewable Solutions , 2014 .

[30]  H. Auer,et al.  The looming revolution: How photovoltaics will change electricity markets in Europe fundamentally , 2013 .

[31]  Peter Mark Jansson,et al.  Integrating Renewables into the U.S. Grid: Is It Sustainable? , 2008 .

[32]  Marco Nicolosi.  Wind power integration, negative prices and power system flexibility - An empirical analysis of extreme events in Germany , 2010 .

[33]  O. Edenhofer,et al.  Integration costs revisited – An economic framework for wind and solar variability ☆ , 2015 .

[34]  M. Nicolosi.  Wind power integration and power system flexibility–An empirical analysis of extreme events in Germany under the new negative price regime , 2010 .

[35]  Brian Vad Mathiesen,et al.  Energy system analysis of 100% renewable energy systems-The case of Denmark in years 2030 and 2050 , 2009 .

[36]  Seyed Hamid Hosseini,et al.  Dynamic assessment of capacity investment in electricity market considering complementary capacity m , 2011 .

[37]  M. Genoese,et al.  The merit-order effect: A detailed analysis of the price effect of renewable electricity generation on spot market prices in Germany , 2008 .