Bidding strategy of storage hydropower plants in reserve markets

Laureen Deman (), Quentin Boucher, Sonia Djebali (), Guillaume Guerard () and Cédric Clastres ()
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Laureen Deman: SuperGrid Institute SAS, GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes
Quentin Boucher: SuperGrid Institute SAS
Sonia Djebali: PULV - Pôle Universitaire Léonard de Vinci
Guillaume Guerard: PULV - Pôle Universitaire Léonard de Vinci
Cédric Clastres: GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes

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Abstract: The increasing share of intermittent sources of energy will increase the need for frequency-control reserves. However, the supply from gas- and coal-fired power plants might decrease in the following years. Hydropower technologies are often put forward as mature and low-carbon technologies able to contribute to cover this increasing need for reserves. The procurement of reserves being mostly market-based in Europe, the market design should send price signals to encourage the participation in these markets. This paper analyses the incentives provided by the French market design for seasonal storage and pumped storage hydropower plants to participate in reserve markets. To that end, a deterministic mixed-integer linear optimization model is presented. The objective is to maximize revenues in the energy and reserve markets according to 2019 market prices. The model considers the day-ahead energy market and all the reserve products existing in France, distinguishing between reserve capacity and reserve energy products. By optimising the trade-offs between the day-ahead and the reserve markets, the storage hydropower plant increase its revenues. The pumped storage hydropower plant sometimes chooses the Frequency Containment Reserve market or the day-ahead market only. The apparition of some hours of FCR participation with the pumped storage plant is explained by its higher number of generating hours and by the higher volatility of reserve energy prices. These two factors also explain the higher efficiency of incentive measures with the pumped storage plant.

Keywords: Reserve markets; Hydropower; Market design; Incentives; Storage (search for similar items in EconPapers)
Date: 2021-06-07
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Published in 1st IAEE Online Conference: Energy, Covid, and Climate Change, International Association for Energy Economics, Jun 2021, Paris, France

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03868245

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