Spot and reserve market equilibria and the influence of new reserve market participants

Christian Furtwängler and Christoph Weber

Energy Economics, 2019, vol. 81, issue C, 408-421

Abstract: There is a broad consensus that the energy transition planned in Europe demands a sufficient number of flexibility providers. This contribution proposes to analyse effects of reserve flexibility from CHP, encompassing both the price effects on spot and secondary reserve markets in an endogenous market equilibrium model. Through the analysis of contrasting cases it highlights how the specific nature of CHP plants, and in particular their heat restrictions, lower the cost at which they contribute to the reserve and spot markets due to implied must-run conditions. A somewhat stylized fundamental market model based on input data for Germany in 2016 is used to analyse the price effects of reserve flexibility from Combined Heat and Power (CHP) entering both markets.

Keywords: Equilibrium pricing; Flexibility provision; Reserve markets; Combined heat and power; Heat restrictions (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:81:y:2019:i:c:p:408-421

DOI: 10.1016/j.eneco.2019.03.023

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