Environmental Engineering Reference
In-Depth Information
resources reaches during certain time periods “price maker levels”. The physical nature of
the difficulties are in fact independent of how and by whom the energy is traded.
Our aim is therefore to present an optimisation strategy that works equally well in sys-
tems, where wind power is handled centralised or de-centralised, regardless whether it is
managed by a TSO or not. The basic strategy is the same. The fundamental problem is how
to trade the varying amount of wind power on the market and to determine the value. The
value depends on how well the intermittent energy satisfies the demand, the predictability
of the weather and also how eager the scheduled generators are to deliver power. The dif-
ficulty increases with the ratio between intermittent generation and demand, apart from the
eager scheduled power generators such as CHP plants that also need to generate heat and
therefore have very low marginal costs for electricity generation.
3.2.
Transition from Fixed Prices to the Liberalised Market
The incentive to operate wind optimal from an economic perspective might however
not always be given, if there is a fixed price policy and the consumers are enforced to pay
over tariffs. It is very difficult to clarify in such cases, whether the system can be optimised.
The alternative approach is then to leave it up to the wind generation owners to optimise
the system. Fixed price policies may also be limited to either a number of years or are valid
only until a certain number of MW-hours has been produced. Wind farm owners are usually
thereafter enforced to trade their energy on market terms. The transition to market terms can
be difficult, if there is a public monopoly that dumps the price with wind energy and takes
the loss back over tariffs. This is especially the case on markets that operate with the price-
cross principle on the day ahead spot market (e.g. the Nordic states). This leaves almost no
possibility to get a good price for the energy produced, if the monopoly has enough volume
to meet the demand. Wind power that has to be traded on market terms could in such cases
in the future also be traded outside the market directly to other participants, which may
be capable to absorb the energy in their energy pool. There are in fact also initiatives in
Germany to get the possibility to trade wind energy directly on the market, although wind
energy is by law traded by the TSO's and paid by a fixed price tariff [6]. While it is not yet
clear how such models will be implemented into the legislation, they are a signal that there
is an interest by the society in optimising the cost of clean (wind) energy.
Even though price dumping, as described above, is neutral for the end-users if there
is no or little export, it nevertheless significantly lessens the value of renewables and in
particular wind energy for the wind turbines/farms that operate on the market without the
possibility to get a fixed price. If price dumping leads to export, then the importing party is
receiving energy not only as clean energy, but also for a very low price, partially because it
is paid over governmental subsidy in the area where it was produced. It is expensive for a
society in the producing area to practise such export in the long run. It also means that such
a country either has to produce the bulk of energy from renewables, or otherwise it will
create a negative imbalance in the country's allowance of carbon emissions when exporting
renewables.
In other words, price dumping prevents wind energy from becoming competitive and to
develop to a non-subsidised energy source, at least in Europe. This is in the longer term not
in the society's interest.
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