Environmental Engineering Reference
In-Depth Information
A cost efficient way to dampen volatility is to allocate reserve in advance according to
the uncertainty forecast for the intermittent energy source. The pre-allocation of reserve
secures that a high level of competition can be achieved and last-minute volatility will be
reduced.
A next step to reduce volatility is to create energy pools that allow phase shifting in time
for intermittent energy. This will cap some of the price off the intermittent energy, because
the balancing parties in the pool will demand a higher price than the intermittent generators.
The more uncertainty there is on the pool's output for other market participants, the better
for the pool. There is an incentive to make the pool members dynamic, so the other market
participants cannot guess how much the pool is dependent on the intermittent generation
pattern.
An additional step is required to secure fair prices during periods, where the intermittent
energy is in excess. The market will often know the periods, where the weather is well
predictable and the market price drops. Trading the intermittent energy several days in
advance will allow scheduled generators to reduce their emissions and withhold their own
generation. Their incentive to do so increases, if they can schedule the production well in
advance and thereby cut the marginal costs down.
Trading of intermittent energy requires therefore a special effort and forecasts with an
ensemble technique along with temporary pooling with other energy sources will aid in
achieving efficiency and stable prices.
9.
Conclusion
The major benefit of ensemble prediction methods is that weather dependent energy
generation can be classified as certain and uncertain. It has been tradition to not separate
between certain and uncertain generation in the trading, because day-ahead markets were
used to sell according to one best possible forecast only.
A creative trader could still trade strategically on the basis of a deterministic forecast
and pool the deterministic forecasts with ancillary services and bid in the sum of the inter-
mittent and ancillary service generation with a higher price.
Ensemble forecasting however opens possibilities for more creative and efficient trading
strategies. Additionally, the trading process is going to become more complex and in fact
too complex for a subjective decision process in the future. The objective decision process
then has to be done on a computer based on predefined criteria.
The analysis in this chapter suggests that the model for the objective decision process
has to be kept small. This secures fast convergence of the solution as well as the possibility
for the trained user to redefine boundary conditions and test the solution's sensitivity to
various likely and less likely events.
Another result that can be derived from our analysis is that a balance responsible party
for intermittent energy should issue regular tenders on pool participation. This will allow
an energy pool to deliver power according to a different profile than the weather allows for.
Typically the generation should be phase-shifted to match the demand better. The net result
is then that the market can no longer force the intermittent generator to bid in with low
prices. The intermittent generator thereby gains freedom with the dynamically changing
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