Identifying barriers to large-scale integration of variable renewable electricity into the electricity market : A literature review of market design
By Jing Hu, Robert Harmsen, Wina Crijns-Graus, Ernst Worrell, M. van den Broek. 2018
228 citations recorded by the source corpus.
Abstract For reaching the 2 °C climate target, the robust growth of electricity generation from variable renewable energy sources (VRE) in the power sector is expected to continue. Accommodation of the power system to the variable, uncertain and locational-dependent outputs of VRE causes integration costs. Integrating VRE into a well-functioning electricity market can minimize integration costs and drive investments in VRE and complementary flexible resources. However, the electricity market in the European Union (EU), as currently designed, seems incapable to deliver this end. This paper aims to provide a comprehensive literature review of barriers to the large-scale market integration of VRE in the EU electricity market design. Based on the set-up of the EU electricity market, a framework was developed to incorporate the most pertinent market integration barriers and resulting market inefficiencies. This paper concludes that an overhaul is needed for the current EU electricity market to address all barriers identified. Firstly, a discrete auction intraday market, a marginal pricing balancing market, a two-price imbalance settlement and a nodal pricing locational marginal pricing mechanism seem more promising in limiting integration costs. Secondly, to support business cases of VRE and complementary flexible resources in the electricity market, a level playing field should be established and the price cap should be lifted up to the value of lost load (VOLL). Meanwhile, to fit VRE's market participation, a higher time resolution of trading products and later gate closure time in different submarkets would be required. Lastly, feed-in support schemes currently widely used for VRE investments might be inconsistent with market integration, as they increase integration costs and lock VRE investments in a subsidy-dependent pathway. To avoid such lock-in, further investigation of alternative capacity-based support schemes is recommended.
Subfields: Electrical and Electronic Engineering
View Paper: https://www.semanticscholar.org/paper/e87d7efff8cbff87df8a4b6482935bab61bb1c57
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In Electrical and Electronic Engineering
Citations in the corpus
- A Survey and Evaluation of the Potentials of Distributed Ledger Technology for Peer-to-Peer Transactive Energy Exchanges in Local Energy Markets (2019, unknown): “As a result, the integration costs to account for the magnitude of that increase would make a TMI not economically feasible [44]–[53].”
- Is a 100% renewable European power system feasible by 2050? (2019, background): “Scarcity pricing and capacity remuneration mechanisms are two possible ways to make up for this revenue shortfall [120,121], but neither have been proven at the European scale.”