Impact of Imbalance Pricing on Variable Renewable Energies with Different Prediction Accuracies: A Korean Case

Heeseung Moon, Dongsu Lee, Jeongmin Han, Yongtae Yoon and Seungwan Kim
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Heeseung Moon: Electric Power Network Economics Laboratory, Department of Electrical and Computer Engineering, Seoul National University, 1 Gwanak-ro, Seoul 08826, Korea
Dongsu Lee: Smart Energy Network Design Laboratory, Department of Electrical Engineering, Chungnam National University, 99 Daehak-ro, Daejeon 34134, Korea
Jeongmin Han: Smart Energy Network Design Laboratory, Department of Electrical Engineering, Chungnam National University, 99 Daehak-ro, Daejeon 34134, Korea
Yongtae Yoon: Electric Power Network Economics Laboratory, Department of Electrical and Computer Engineering, Seoul National University, 1 Gwanak-ro, Seoul 08826, Korea
Seungwan Kim: Smart Energy Network Design Laboratory, Department of Electrical Engineering, Chungnam National University, 99 Daehak-ro, Daejeon 34134, Korea

Energies, 2021, vol. 14, issue 13, 1-19

Abstract: Although the Korean government plans to increase its share of variable renewable energies (VREs), the Korean power market is not sufficiently mature to accommodate a large increase in VRE generation. Thus, the Korean system operator plans to introduce a two-settlement, and an imbalance settlement is also under consideration, among several options. Therefore, this study analyzes how many incentives are given for prediction accuracy under several imbalance settlement schemes adopted from European and US power markets. Results show that the imbalance settlement consisting of threshold and penalty terms is useful for rule-makers, who can control revenue differences between the groups with different prediction accuracies by adjusting the two terms. The suggestion given in the paper will be useful for not only the Korean power market but also for the countries that plan to establish the imbalance settlement rules while increasing renewable energy.

Keywords: variable renewable energy; forecast error; imbalance settlement (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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