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The search for the perfect match: Aligning power-trading products to the energy transition

Gilbert Fridgen, Anne Michaelis, Maximilian Rinck, Michael Schöpf and Martin Weibelzahl

Energy Policy, 2020, vol. 144, issue C

Abstract: Given the growing share of uncertain renewable energy production, the energy transition challenges modern power systems and especially calls for increased flexibility. However, relevant information on the highly asset-specific flexibility potential is typically only known to plant operators themselves and not, e.g., to transmission system operators. Therefore, liberalized electricity markets use prices that set explicit monetary incentives to disclose the relevant private information about the market participants’ assets. In this way, information asymmetries may be reduced. Given the different challenges of an integration of renewables, we argue that the associated new forms of volatile power profiles require new forms of power-trading products. In particular, based on recent advances in technical power measurement and billing, individual and market participant-specific power profiles may be superior to the current trading of average volumes. Against this background, we first outline various evolutionary adjustments of existing power-trading products and their underlying product parameters including (1) strengthening local pricing, (2) finer temporal granularity, (3) smaller minimum volume, and (4) shorter gate-closure time. Second, we open up a new perspective in form of a more disruptive shift towards power-profile trade, where market participants define their trading product using the actual power profile as a new product parameter.

Keywords: Energy transition; Flexibility market trading; Power-trading products; Electricity exchange; Power-profiles; Demand side management (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.enpol.2020.111523

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