Local Flexibility Market

Peter Cramton

No 182, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany

Abstract: A local flexibility market is presented that addresses intrazonal congestion in a zonal electricity market. The market lets system operators access flexibility at multiple voltage levels to satisfy transmission constraints. Market participants offer local flexibility intraday in a continuous trading process. This supply is matched with demand from system operators. The market-based redispatch is transparent and technology neutral. Inc-dec gaming is mitigated with features to detect and sanction the behavior. Cost-based redispatch from conventional generation serves as a backstop if additional flexibility is required close to real time. This further mitigates inc-dec gaming by disciplining behavior in the spot market. An advantage of the approach in Europe is that it represents a modest change from the current market and therefore can be implemented sooner and with less risk.

Keywords: local flexibility; congestion pricing; market design; electricity markets; electricity regulation (search for similar items in EconPapers)
Pages: 10 pages
Date: 2022-08
New Economics Papers: this item is included in nep-ene and nep-reg
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https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_182_2022.pdf First version, 2022 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:ajk:ajkdps:182

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