Impact of the integration of operating constraints of thermal generation assets in electricity market models

Florent Cogen, Virginie Dussartre, Emily Little and Fabien Roques

Energy Economics, 2025, vol. 148, issue C

Abstract: Balancing energy markets are currently being implemented in the European power system, progressively replacing historical balancing processes that were designed at a local scale. Occurring within the last hour before real-time, these markets are consequently subject to specific constraints. Among these, operating constraints applied to generation and consumption units heavily conflict with the order formulation process of market actors. This paper curates a list of operating constraints–particularly related to thermal units–relevant to the balancing time frame, before highlighting the incomplete inclusion of these constraints in common energy market models. It then proposes a modeling approach that incorporates them in the electricity market agent-based model ATLAS, and demonstrates the impact of each one through a case study on the 2030 European power system. Results show that modeling operating constraints leads to a significant decrease of market liquidity (up to 60%), and to subsequent impacts on market performances (notably a 114% increase in balancing costs and a doubling of the volume of unsupplied Transmission System Operator balancing demand). This advocates for the relevance of the inclusion of these constraints in balancing market models, and puts into perspective results obtained without them.

Keywords: Balancing energy markets; Replacement reserves; Harmonized balancing products; Electricity market modeling; Operating constraints (search for similar items in EconPapers)
JEL-codes: C63 D43 D47 L11 L94 Q41 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:148:y:2025:i:c:s014098832500413x

DOI: 10.1016/j.eneco.2025.108589

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