A simulation model for imbalance costs of renewable energy aggregators: The case of Greek balancing market

Filippos Ioannidis, Tatiani Georgitsioti, Kyriaki Kosmidou, Constantinos Zopounidis and Kostas Andriosopoulos

Energy Economics, 2025, vol. 142, issue C

Abstract: The increased penetration of renewable energy sources in Europe has accelerated the participation of aggregators in the wholesale electricity markets. Those participants are responsible for market representation and act as balancing responsible parties for any volume deviation between forecast and actual generation. The Greek Balancing Market is used as a case study, since it is considered as one of the most rapidly growing renewable energy markets across Europe. In this paper, we develop a simulation model able to capture the financial impact of non-compliance charges burdened by aggregators of different size including national terms and conditions. The analysis is also applied to a stressed scenario by assuming marginal deviation above their regulated tolerance limits. Results indicate that for aggregators with market share greater than 5 %, by assuming a double increase in GWh of their annual deviation, would eventually lead to four times higher non-compliance charges. Likewise, an aggregator with capacity of 550 MW would encounter annual non-compliance charges ranging from 1 million € to 2.7 million € for a deviation range of 5 % to 6.5 %. Those findings indicate significant balancing costs burdened by aggregators that jeopardize their long-term viability and eventually the whole market's operation. This is the first paper to empirically capture the complexity of aggregators market in Greece and highlights the necessity to adjust the current electricity market framework by regulators and policymakers.

Keywords: Aggregators; Balancing market; Imbalance cost; Simulation model (search for similar items in EconPapers)
JEL-codes: C63 L19 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:142:y:2025:i:c:s0140988324008648

DOI: 10.1016/j.eneco.2024.108155

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