Design of Electricity Markets for Efficient Balancing of Wind Power Generation

Sammanfattning: Deploying wind power to a larger extent is one solution to reduce negative environmental impacts of electric power supply. However, various challenges are connected with increasing wind power penetration levels. From the perspective of transmission system operators, this includes balancing of varying as well as - to some extent - uncertain generation levels. From the perspective of power generating companies, changes in the generation mix will affect the market's merit order and, hence, their profits. This thesis focuses on provision and use of flexibility in the Nordic electricity market.First, this thesis studies wind power variations and accuracy of wind power forecasts in Sweden using statistical methods. Even though today’s wind penetration levels are still low in Sweden, power systems and electricity markets have to cope with these characteristics of variations and forecast errors to a larger extent in future.Second, it investigates to which extent an increased exchange and use of flexibility that is available in the intraday time-frame could efficiently facilitate system balancing and whether this would also be profitable from the power generating companies' perspective. Here, a simulation model is developed that reflects important aspects of production planning and trading decisions in the intraday time-frame. In a first case study, it is shown that the benefits of internal rescheduling strongly depend on the costs to adjust production plans in the intraday time-frame as compared to real-time. In a second case study, it becomes evident that trading flexibility in the intraday time-frame can reduce the need for system balancing more efficiently than internal rescheduling within each balance responsible party.Motivated by the positive gains of intraday trading and the challenge of appropriately modelling continuous intraday markets, trading activity and price development on Elbas is investigated. The results provide insights into trading behaviour on a continuous intraday market and show that trading is not always in accordance to the power system's physical situation. To the extent to which better information and adaptations in the market design could improve the market participants' base for trading decisions, policy recommendations and further research questions areas suggested.