Digitalization of short-term resource allocation in power markets

A well-functioning power market should ensure that resources are allocated optimally including considerations of security of supply. With higher shares of renewables in the electricity generation mix this leads to more challenges and increases the need for resources that can provide flexibility. Digitalization of short-term resource allocation can be an important enabler for a more efficient system. The aim of the PowerDig project is to define and analyze new market designs ensuring optimal short-run allocation of energy resources based on digitalization capabilities. PowerDig analyses market designs that are dynamic in temporal and in spatial resolution to handle a higher share of renewables. This will address shortcomings in existing markets related to both the allocation and pricing of flexibility, and services related to the security of supply. PowerDig develops different mathematical programming models to analyze the operations of the Norwegian power market and mechanisms for providing the needed flexibility to ensure a secure and efficient system. These activities include analyzing the current market design (Day-Ahead=>Intra Day=>Grid Redispatch), integrating flexibility markets, and understanding TSO-DSO coordination. These activities are under the perspective that digitalization and digital platforms will be an enabler on defining new roles, automatization, and market mechanisms. The PowerDig project is led by NTNU, with research partners SINTEF Energi and NHH/SNF as well as active industry partners: Statnett and Statkraft. In short, the PowerDig project will research how to: i) Reduce market entry barriers, thus enable participation in power markets for new actors like flexible consumers, ii) Price resources more efficiently in terms of short-term and long-term allocation, increasing welfare (reducing overall costs), maintaining security of supply, iii) By allocating the right price to flexibility, increase the value of Norwegian hydropower resources and smart charging, advanced home management or similar, iv) Increase availability of flexibility in a distributed system to save or delay investments in distribution grids, v) Enable better coordination between DSO and TSO level to save or delay investments in transmission, vi) Enable more cross border trading of flexibility that may reduce overall system costs and increase value of flexible resources, vii) Establish business opportunities for companies providing digital platforms in energy markets, as well as market platforms and services on these giving Norwegian companies a competitive advantage, and viii) Make the future flexibility markets secure addressing cyber security both at the person level and system level. This is a prerequisite for protecting consumer rights and security of supply. To address these research themes, PowerDig analyses cover the entire power market chain, including the day-ahead market, intraday market, and the grid redispatch process, including cross-border transactions for whole Norway. For the intraday stage, we examine both the existing continuous markets and the forthcoming auction-based markets. The introduction of a new auction-based intraday market, slated for production in 2024, marks a significant development. This Power market modeled is designed to operate three intra-day auctions daily. PowerDig project insights, results and activities are documented and available to the public at the project website: https://powerdig.eu/

The aim of the PowerDig project is to define new market designs ensuring optimal short-run allocation of energy resources based on digitalization capabilities. PowerDig will propose market designs that are dynamic in temporal and in spatial resolution in order to handle a higher share of renewables and address shortcomings in existing markets related to both the allocation and pricing of flexibility, scarcity resources and services related to the security of supply. A central part of the project is to understand and adequately address the relation between these and energy-only markets as planning horizons become shorter. PowerDig is addressing the following key challenges, developments and activities: -Study how digitalization and digital platforms enable new market designs at the different levels of the power system (neighbourhood, DSO, TSO, cross-border) and the interplay between these levels. -Define flexibility-based products for existing and new players and understand the technological and economic properties of these. -Suggest procedures for the interaction between the different players and dynamically handle the configuration of markets. -Describe how flexibility products can be used as digitalization opens up boundaries (geographical and temporal) on where and when electricity and flexibility products can be traded and allocated. - Consider and develop fast prediction of congestions as part of the dynamic configuration of temporal and geographical market configurations. Challenge current market design where these dimensions are static. -Identify implications of digitalization and develop security guidelines towards a comprehensive strategy on how to guarantee a secure transition to a decentralized and digitalized system for short-term resource allocation.