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Bidding into balancing markets in a hydro-dominated electricity system
Discussion paper / Internet publication
ID 4512371
Author(s) Schillinger, Moritz; Weigt, Hannes
Author(s) at UniBasel Weigt, Hannes
Schillinger, Moritz
Year 2019
Month and day 08-02
Title Bidding into balancing markets in a hydro-dominated electricity system
Series title WWZ Working Paper
Volume 2019
Number 13
Pages 49
Publisher / Institution WWZ
Keywords hydropower; cross-market optimization; balancing; Switzerland
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.
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