How much is enough? Optimal support payments in a renewable-rich power system
2016 (English)In: Energy, ISSN 0360-5442, E-ISSN 1873-6785, Vol. 117, no 1, 300-313 p.Article in journal (Refereed) Published
The large-scale deployment of intermittent renewable energy sources may cause substantial power imbalance. Together with the transmission grid congestion caused by the remoteness of these sources from load centers, this creates a need for fast-adjusting conventional capacity such as gas-fired plants. However, these plants have become unprofitable because of lower power prices due to the zero marginal costs of renewables. Consequently, policymakers are proposing new measures for mitigating balancing costs and securing supply. In this paper, we take the perspective of the regulator to assess the effectiveness of support payments to flexible generators. Using data on the German power system, we implement a bi-level programming model, which shows that such payments for gas-fired plants in southern Germany reduce balancing costs and can be used as part of policy to integrate renewable energy.
Place, publisher, year, edition, pages
2016. Vol. 117, no 1, 300-313 p.
Renewable energy, Support payments, Day-ahead market, Balancing market, Congestion management, Mathematical programming with equilibrium constraints
Research subject Computer and Systems Sciences
IdentifiersURN: urn:nbn:se:su:diva-135425DOI: 10.1016/j.energy.2016.10.058OAI: oai:DiVA.org:su-135425DiVA: diva2:1045209