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Cross-Border Exchange and Sharing of Generation Reserve Capacity

Author

Listed:
  • Fridrik M. Baldursson
  • Ewa Lazarczyk
  • Marten Ovaere
  • Stef Proost
Abstract
This paper develops a stylized model of cross-border balancing. We distinguish three degrees of cooperation: autarky, reserves exchange and reserves sharing. The model shows that TSO cooperation reduces costs. The gains of cooperation increase with cost asymmetry and decrease with correlation of real-time imbalances. Based on actual market data of reserves procurement of positive and negative automatic frequency restoration reserves in Belgium, France, Germany, the Netherlands, Portugal and Spain, we estimate the procurement cost decrease of exchange to be €165 million per year without transmission constraints and €135 million per year with transmission constraints. The cost decrease of sharing is estimated to be €500 million per year. The model also shows that voluntary cross-border cooperation could be hard to achieve, as TSOs do not necessarily have correct incentives.

Suggested Citation

  • Fridrik M. Baldursson & Ewa Lazarczyk & Marten Ovaere & Stef Proost, 2018. "Cross-Border Exchange and Sharing of Generation Reserve Capacity," The Energy Journal, , vol. 39(4), pages 57-84, July.
    • Handle: RePEc:sae:enejou:v:39:y:2018:i:4:p:57-84
    DOI: 10.5547/01956574.39.4.fbal
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    References listed on IDEAS

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    1. Marten Ovaere & Stef Proost, 2016. "Electricity transmission reliability: the impact of reliability criteria," Working Papers of Department of Economics, Leuven 551144, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
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    8. Neuhoff, Karsten & Richstein, Jörn, 2016. "Coordinated Balancing of the European Power System," EconStor Research Reports 141422, ZBW - Leibniz Information Centre for Economics.
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    Cited by:

    1. Churkin, Andrey & Bialek, Janusz & Pozo, David & Sauma, Enzo & Korgin, Nikolay, 2021. "Review of Cooperative Game Theory applications in power system expansion planning," Renewable and Sustainable Energy Reviews, Elsevier, vol. 145(C).
    2. Astier, Nicolas & Ovaere, Marten, 2022. "Reliability standards and generation adequacy assessments for interconnected electricity systems," Energy Policy, Elsevier, vol. 168(C).
    3. Ovaere, Marten & Heylen, Evelyn & Proost, Stef & Deconinck, Geert & Van Hertem, Dirk, 2019. "How detailed value of lost load data impact power system reliability decisions," Energy Policy, Elsevier, vol. 132(C), pages 1064-1075.
    4. Christos Roumkos & Pandelis N. Biskas & Ilias G. Marneris, 2022. "Integration of European Electricity Balancing Markets," Energies, MDPI, vol. 15(6), pages 1-26, March.
    5. Carlson, Ewa Lazarczyk & Pickford, Kit & Nyga-Łukaszewska, Honorata, 2023. "Green hydrogen and an evolving concept of energy security: Challenges and comparisons," Renewable Energy, Elsevier, vol. 219(P1).
    6. Zhang, Mingming & Nie, Jinchen & Su, Bin & Liu, Liyun, 2024. "An option game model applicable to multi-agent cooperation investment in energy storage projects," Energy Economics, Elsevier, vol. 131(C).

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    More about this item

    Keywords

    Cross-border balancing; generation reserves; reserves procurement; multi-TSO interactions;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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