The European balancing market is undergoing radical transformation through numerous market design initiatives. These initiatives aim at improving geographical coordination among European transmission system operators, and better positioning the European system for integrating renewable resources through short-term operational efficiency and long-term investment in flexible resources. However, the European design is characterized by a missing market for real-time reserve capacity, that has been inherited from a failure to recognize the central role of real-time operations as the spot market of the electric power industry. This missing market undermines the valuation of reserve capacity, and the back-propagation of price signals to forward reserve markets that can support investment in reserves. The goal of the talk is to present a methodology that exposes the implications of this missing market. The methodology relies on analytical insights that can be derived under an assumption of price-taking behavior. These insights are validated by a simulation model which represents the European balancing market as a Markov Decision Process. The simulation model is used for validating the analytical insights and testing the ability of various balancing market design options to back-propagate the real-time value of reserve to forward reserve markets.
Anthony Papavasiliou is an associate professor at the Université catholique de Louvain, where he holds the ENGIE Chair. Anthony works on operations research, electricity market design, and electric power system operations. He is an associate editor for Operations Research and the IEEE Transactions on Power Systems. He is a recipient of an ERC Starting Grant and the Francqui Foundation research professorship.
Meeting ID: 884 9215 4902