Intermittent Renewables, Balancing Services, and Electricity Market Design

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With large European investments in new renewable power (mostly wind) attaining policy support, the share of intermittent power will surge. As the overall flow of electricity must continuously be balanced, increased wind power production will put strains o n the supply of balancing power (and partly ancillary services). For Norway, this development poses both challenges and opportunities. Due to its large installed hydro power capacity, Norway may be in a unique position in Europe to provide balancing power . But Norway will in so case be transitioning from abundance of balancing capacity to a setting where balancing capacity needs to be carefully managed in market design. INTREPED will first analyse the variability and predictability of windpower, how it af fects system requirements and wind value. Secondly, stochastic influences from wind systems are brought into a realistic model of our grids. From these fundamentals, INTREPED addresses market design: how the current markets value balancing power, and how auctions may be revised and expanded. We analyse the need of redesigning markets and pricing arrangements. From there, INTREPED analyses how the spatial network allows diversification under alternative market designs. Finally, INTREPED analyses market des ign implications if balancing services are to be traded on interconnectors between Nordic and non-Nordic countries, comparing fully integrated markets for balancing services with other avenues.