Electricity markets consist of a day-ahead market permitting to settle on supply, consumption and prices, and a real-time market for settling on deviations from the day-ahead schedule. Such mechanisms were designed in a context where dispatchable generators were dominating, with demand mostly seen as inflexible. These mechanisms are challenged by the advent of renewable energy, which brought substantial variability and lack of predictability, complemented by more pro-active demand. The central objective is to rethink the design of electricity markets by embedding the uncertain nature of renewable energy supply and consumption in the market mechanism itself.
Offers will take a probabilistic form, while market clearing will rely on stochastic optimization. A proposal of a conceptual market framework will be initially tested in a toy model based on NordPool and later will be generalised for various forms of electricity markets.
Addressing effectively the uncertainty in electricity markets will benefit power system operations, and increase social welfare by introducing more efficient market designs.
Supported by 5s - Future Electricity Markets | To be completed: 2016