IDEAS home Printed from https://ideas.repec.org/a/sae/enejou/v38y2017i6p105-135.html
   My bibliography  Save this article

Remuneration of Flexibility using Operating Reserve Demand Curves: A Case Study of Belgium

Author

Listed:
  • Anthony Papavasiliou
  • Yves Smeers

Abstract

ABSTRACT Flexibility is becoming an increasingly important attribute of conventional generators due to the challenges imposed by the unpredictable, highly variable and non-controllable nature of renewable supply. Paradoxically, flexible units are currently being mothballed or retired in Europe due to financial losses. Weinvestigate an energy-only market design, referred to as operating reserve demand curves, that rewards flexibility by adjusting the real-time energy price to a level that reflects the value of capacity under conditions of scarcity. We test the performance of the mechanism by developing a model of the Belgian electricity market, which is validated against the historical outcomes of the market over a study period of 21 months. We verify that (i) based on the observed market outcomes of our study period, none of the existing combined cycle gas turbines of the Belgian market can cover their investment costs, and (ii) the introduction of price adders that reflect the true value of scarce flexible capacity restores economic viability for most combined cycle gas turbines in the Belgian market.

Suggested Citation

  • Anthony Papavasiliou & Yves Smeers, 2017. "Remuneration of Flexibility using Operating Reserve Demand Curves: A Case Study of Belgium," The Energy Journal, , vol. 38(6), pages 105-135, November.
  • Handle: RePEc:sae:enejou:v:38:y:2017:i:6:p:105-135
    DOI: 10.5547/01956574.38.6.apap
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5547/01956574.38.6.apap
    Download Restriction: no

    File URL: https://libkey.io/10.5547/01956574.38.6.apap?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Anthony Papavasiliou & Shmuel S. Oren, 2013. "Multiarea Stochastic Unit Commitment for High Wind Penetration in a Transmission Constrained Network," Operations Research, INFORMS, vol. 61(3), pages 578-592, June.
    2. PAPAVASILIOU, Anthony & OREN, Schmuel S., 2013. "Multiarea stochastic unit commitment for high wind penetration in a transmission constrained network," LIDAM Reprints CORE 2500, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Faezeh Akhavizadegan & Lizhi Wang & James McCalley, 2020. "Scenario Selection for Iterative Stochastic Transmission Expansion Planning," Energies, MDPI, vol. 13(5), pages 1-18, March.
    2. Noori, Ehsan & Khazaei, Ehsan & Tavaro, Mehdi & Bardideh, Farhad, 2019. "Economically Operation of Power Utilities Base on MILP Approach," MPRA Paper 95910, University Library of Munich, Germany.
    3. Howard, B. & Waite, M. & Modi, V., 2017. "Current and near-term GHG emissions factors from electricity production for New York State and New York City," Applied Energy, Elsevier, vol. 187(C), pages 255-271.
    4. Hain, Martin & Kargus, Tobias & Schermeyer, Hans & Uhrig-Homburg, Marliese & Fichtner, Wolf, 2022. "An electricity price modeling framework for renewable-dominant markets," Working Paper Series in Production and Energy 66, Karlsruhe Institute of Technology (KIT), Institute for Industrial Production (IIP).
    5. Munoz, Francisco D. & Pumarino, Bruno J. & Salas, Ignacio A., 2017. "Aiming low and achieving it: A long-term analysis of a renewable policy in Chile," Energy Economics, Elsevier, vol. 65(C), pages 304-314.
    6. Le Cadre, Hélène & Mezghani, Ilyès & Papavasiliou, Anthony, 2019. "A game-theoretic analysis of transmission-distribution system operator coordination," European Journal of Operational Research, Elsevier, vol. 274(1), pages 317-339.
    7. De Vos, K. & Stevens, N. & Devolder, O. & Papavasiliou, A. & Hebb, B. & Matthys-Donnadieu, J., 2019. "Dynamic dimensioning approach for operating reserves: Proof of concept in Belgium," Energy Policy, Elsevier, vol. 124(C), pages 272-285.
    8. Trine K. Boomsma, 2019. "Comments on: A comparative study of time aggregation techniques in relation to power capacity-expansion modeling," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 27(3), pages 406-409, October.
    9. Majid Al-Gwaiz & Xiuli Chao & Owen Q. Wu, 2017. "Understanding How Generation Flexibility and Renewable Energy Affect Power Market Competition," Manufacturing & Service Operations Management, INFORMS, vol. 19(1), pages 114-131, February.
    10. Johnson, Samuel C. & Papageorgiou, Dimitri J. & Mallapragada, Dharik S. & Deetjen, Thomas A. & Rhodes, Joshua D. & Webber, Michael E., 2019. "Evaluating rotational inertia as a component of grid reliability with high penetrations of variable renewable energy," Energy, Elsevier, vol. 180(C), pages 258-271.
    11. Aghaei, Jamshid & Nikoobakht, Ahmad & Siano, Pierluigi & Nayeripour, Majid & Heidari, Alireza & Mardaneh, Mohammad, 2016. "Exploring the reliability effects on the short term AC security-constrained unit commitment: A stochastic evaluation," Energy, Elsevier, vol. 114(C), pages 1016-1032.
    12. ARAVENA, Ignacio & PAPAVASILIOU, Anthony, 2016. "An Asynchronous Distributed Algorithm for solving Stochastic Unit Commitment," LIDAM Discussion Papers CORE 2016038, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    13. Wang, Bo & Wang, Shuming & Zhou, Xianzhong & Watada, Junzo, 2016. "Multi-objective unit commitment with wind penetration and emission concerns under stochastic and fuzzy uncertainties," Energy, Elsevier, vol. 111(C), pages 18-31.
    14. Heejung Park, 2022. "A Unit Commitment Model Considering Feasibility of Operating Reserves under Stochastic Optimization Framework," Energies, MDPI, vol. 15(17), pages 1-22, August.
    15. Yonghan Feng & Sarah Ryan, 2016. "Solution sensitivity-based scenario reduction for stochastic unit commitment," Computational Management Science, Springer, vol. 13(1), pages 29-62, January.
    16. Hohl, Cody & Lo Prete, Chiara & Radhakrishnan, Ashish & Webster, Mort, 2023. "Intraday markets, wind integration and uplift payments in a regional U.S. power system," Energy Policy, Elsevier, vol. 175(C).
    17. Jeanne Aslak Petersen & Ditte Heide-Jørgensen & Nina Detlefsen & Trine Boomsma, 2016. "Short-term balancing of supply and demand in an electricity system: forecasting and scheduling," Annals of Operations Research, Springer, vol. 238(1), pages 449-473, March.
    18. Hélène Le Cadre & Anthony Papavasiliou & Yves Smeers, 2015. "Wind Farm Portfolio Optimization under Network Capacity Constraints," Post-Print hal-01007992, HAL.
    19. Jeanne Aslak Petersen & Ditte Mølgård Heide-Jørgensen & Nina Kildegaard Detlefsen & Trine Krogh Boomsma, 2016. "Short-term balancing of supply and demand in an electricity system: forecasting and scheduling," Annals of Operations Research, Springer, vol. 238(1), pages 449-473, March.
    20. Muñoz, Francisco D. & Suazo-Martínez, Carlos & Pereira, Eduardo & Moreno, Rodrigo, 2021. "Electricity market design for low-carbon and flexible systems: Room for improvement in Chile," Energy Policy, Elsevier, vol. 148(PB).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:enejou:v:38:y:2017:i:6:p:105-135. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.