DER Participation in Ancillary Services Market: An Analysis of Current Trends and Future Opportunities

Martina Arosio and Davide Falabretti ()
Additional contact information
Martina Arosio: Department of Energy, Politecnico di Milano, 20133 Milano, Italy
Davide Falabretti: Department of Energy, Politecnico di Milano, 20133 Milano, Italy

Energies, 2023, vol. 16, issue 5, 1-21

Abstract: In an effort to push for low-carbon transition, national governments and regulatory authorities are working to define market structures and legislative frameworks able to effectively support the spreading of electricity production from renewables. To this purpose, the opening of national Ancillary Services Markets (ASMs) to Distributed Energy Resources (DERs) plays a key role. However, pricing schemes and rules in place (e.g., incentives) can act as a barrier to the supply of regulation services by small-sized and renewable-based power plants. In this context, the present work evaluates the economic opportunities for DERs provided by the provision of tertiary reserve and balancing control in the Italian ASM. The research is carried out through the collection and processing of price data from the Italian electricity and gas markets over 4 years (2019–2022). Considering a reference architecture where DER units bid on the market through a Balancing Service Provider, the potential revenues on the ASM of a non-programmable or partially programmable DER unit are compared to the earnings expected of a conventional power plant in order to highlight whether unfair competition can represent a barrier. Then, possible evolutions in the current remuneration schemes are analyzed, to evaluate whether they can be able to support a better DER integration. From the analysis, it emerges that, even if negative prices could be useful to increase the competitiveness of RES-based power plants for downward regulation, the loss of the incentives can act as a deterrent to the offering of services on the market by DERs. Therefore, other regulatory options, such as the incentives retention in case of downward regulation, could also be needed.

Keywords: ancillary service market; distributed energy resources; negative prices; price trend; retention of incentives (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: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/1996-1073/16/5/2443/pdf (application/pdf)
https://www.mdpi.com/1996-1073/16/5/2443/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jeners:v:16:y:2023:i:5:p:2443-:d:1087389

Access Statistics for this article

Energies is currently edited by Ms. Agatha Cao

More articles in Energies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().