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The electricity balancing market: Exploring the design challenge

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  • van der Veen, Reinier A.C.
  • Hakvoort, Rudi A.

Abstract

In the unbundled national electricity markets in Europe, the balancing market is the institutional arrangement that deals with the balancing of electricity demand and supply. This paper presents a framework for policy makers that identifies the relevant design variables and performance criteria that play a role in the design and analysis of European balancing markets. We outline the full extent of the design challenge through a discussion of trade-offs among performance criteria, uncertain effects of design variables, and the many inter-linkages between the balancing market and the electricity market at large. Policy makers can address the balancing market design challenge by adopting a structured approach in which design variables, performance criteria, market conditions, system developments, and resultant market incentives are explicitly considered.

Suggested Citation

  • van der Veen, Reinier A.C. & Hakvoort, Rudi A., 2016. "The electricity balancing market: Exploring the design challenge," Utilities Policy, Elsevier, vol. 43(PB), pages 186-194.
    • Handle: RePEc:eee:juipol:v:43:y:2016:i:pb:p:186-194
    DOI: 10.1016/j.jup.2016.10.008
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    References listed on IDEAS

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    1. van der Veen, Reinier A.C. & Abbasy, Alireza & Hakvoort, Rudi A., 2012. "Agent-based analysis of the impact of the imbalance pricing mechanism on market behavior in electricity balancing markets," Energy Economics, Elsevier, vol. 34(4), pages 874-881.
    2. Riedel, Stefan & Weigt, Hannes, 2007. "German Electricity Reserve Markets," MPRA Paper 65664, University Library of Munich, Germany.
    3. Rebours, Yann & Kirschen, Daniel & Trotignon, Marc, 2007. "Fundamental Design Issues in Markets for Ancillary Services," The Electricity Journal, Elsevier, vol. 20(6), pages 26-34, July.
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