Bidding into balancing markets in a hydro-dominated electricity system

Moritz Schillinger () and Hannes Weigt
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Moritz Schillinger: University of Basel

Working papers from Faculty of Business and Economics - University of Basel

Abstract: In an electricity system, demand and supply have to be balanced in real time. Since most energy is traded before real time already in forward, day-ahead and intraday markets imbalances can occur. To ensure the balance between demand and supply even if power plants deviate from their schedules, the system operator procures balancing capacity and energy in balancing markets. The market outcomes may significantly differ from one country to the other depending on the underlying generation technologies and market design. In this paper, we have a look at the balancing market prices of a hydro-dominated electricity system using Switzerland as a case study. By using a short-term hydropower operation model and a set of Swiss hydropower plants, we are able to identify a competitive benchmark for Swiss balancing market prices defined by the opportunity costs of hydropower for providing balancing capacity. Our results show that Swiss balancing market prices are influenced by several drivers but do not hint at any market imperfections.

Keywords: hydropower; cross-market optimization; balancing; Switzerland (search for similar items in EconPapers)
Date: 2019-08
New Economics Papers: this item is included in nep-ene and nep-reg
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:bsl:wpaper:2019/13

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