What Incentives Are Required for Renewables to Provide Redispatch Services? A Simulation in a Multi-Market Setting

Abstract

Renewable energy sources (RES) can provide valuable flexibility potential for multiple markets and grid services in the future. In this paper, the focus lies on the development of algorithms for an optimal dispatch and bidding of a RES-based virtual power plant (VPP) by considering current short-term and balancing market conditions in Austria, as well as a proposed redispatch market. Specifically, different pricing and bidding strategies for a redispatch market are compared and their feasibility is analyzed. The attractiveness of different pricing models and remuneration mechanisms for redispatch, as well as the influence of the redispatch call probability on the bidding behavior of the VPP, is investigated. The simulation of the bidding behavior is carried out using linear optimization techniques. The paper describes the algorithms as well as the assumptions for market rules in redispatch, balancing and short-term electricity markets. The results show that the probability to be activated for redispatch and thus the required incentives depend highly on the location of the plant. Pre-curtailment of the plant to offer positive redispatch is not recommended as the prices would need to be set at up to 200–300% of the day-ahead price.

Keywords

• portfolio optimization
• redispatch
• balancing
• electricity markets
• pricing schemes
• VPP