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Cross-border Exchange and Sharing of Generation Reserve Capacity

Author

Listed:
  • Baldursson, Fridrik M

    (Reykjavik University)

  • Lazarczyk, Ewa

    (University of Reykjavik)

  • Ovaere, Marten

    (KU Leuven)

  • Proost, Stef

    (KU Leuven)

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 160 million euro per year and of sharing to be 500 million euro 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

  • Baldursson, Fridrik M & Lazarczyk, Ewa & Ovaere, Marten & Proost, Stef, 2017. "Cross-border Exchange and Sharing of Generation Reserve Capacity," Working Paper Series 1178, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:1178
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    References listed on IDEAS

    as
    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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    6. Doorman, Gerard L. & van der Veen, Reinier, 2013. "An analysis of design options for markets for cross-border balancing of electricity," Utilities Policy, Elsevier, vol. 27(C), pages 39-48.
    7. Sebastian Just, 2015. "The german market for system reserve capacity and balancing energy," EWL Working Papers 1506, University of Duisburg-Essen, Chair for Management Science and Energy Economics, revised Aug 2015.
    8. Neuhoff, Karsten & Richstein, Jörn, 2016. "Coordinated Balancing of the European Power System," EconStor Research Reports 141422, ZBW - Leibniz Information Centre for Economics.
    9. Adriaan Weijde & Benjamin Hobbs, 2011. "Locational-based coupling of electricity markets: benefits from coordinating unit commitment and balancing markets," Journal of Regulatory Economics, Springer, vol. 39(3), pages 223-251, June.
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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. 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).
    5. 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).
    6. Christos Roumkos & Pandelis N. Biskas & Ilias G. Marneris, 2022. "Integration of European Electricity Balancing Markets," Energies, MDPI, vol. 15(6), pages 1-26, March.

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    More about this item

    Keywords

    Cross-border balancing; Generation reserves; Multi-TSO interactions; Electricity transmission reliability;
    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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