Short term electricity trading for system balancing: An empirical analysis of the role of intraday trading in balancing Germany's electricity system
Abstract Previous studies have noted that, unexpectedly, Germany's dramatic expansion of wind and solar energy coincided with a reduction of short term balancing reserves. This observation has been dubbed the "German Balancing Paradox" This paper provides further and updated evidence: since 2011, wind and solar energy have nearly doubled while both reserve requirements and reserve use have declined by 50% The paper quantitatively explores one reason for reduced balancing needs: increased and improved short term wholesale electricity trading on the intraday market. Trading is now commonly done around the clock and based on quarter hour, rather than full hour, contracts. The shift to quarter hourly products alone explains a decrease in balancing energy by 17% There is also strong evidence that market parties respond efficiently to imbalance charges, suggesting that incentive based approaches to electricity balancing work.
Renewable and Sustainable Energy Reviews