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Bidding into balancing markets in a hydro-dominated electricity system

Schillinger, Moritz and Weigt, Hannes. (2019) Bidding into balancing markets in a hydro-dominated electricity system. WWZ Working Paper, 2019 (13). bas.

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Official URL: https://edoc.unibas.ch/71783/

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Abstract

In an electricity system, demand and supply have to be balanced in real time. Since most energy is traded before real time already in forward, day-ahead and intraday markets imbalances can occur. To ensure the balance between demand and supply even if power plants deviate from their schedules, the system operator procures balancing capacity and energy in balancing markets. The market outcomes may significantly differ from one country to the other depending on the underlying generation technologies and market design. In this paper, we have a look at the balancing market prices of a hydro-dominated electricity system using Switzerland as a case study. By using a short-term hydropower operation model and a set of Swiss hydropower plants, we are able to identify a competitive benchmark for Swiss balancing market prices defined by the opportunity costs of hydropower for providing balancing capacity. Our results show that Swiss balancing market prices are influenced by several drivers but do not hint at any market imperfections.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Energieökonomik (Weigt)
12 Special Collections > WWZ Publications > WWZ Discussion Papers and Working Papers
UniBasel Contributors:Weigt, Hannes and Schillinger, Moritz
Item Type:Working Paper
Publisher:WWZ
Number of Pages:49
Note:Publication type according to Uni Basel Research Database: Discussion paper / Internet publication
Language:English
Identification Number:
  • handle: RePEc:bsl:wpaper:2019/13
Last Modified:30 Aug 2019 08:51
Deposited On:30 Aug 2019 08:51

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