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Register a new userThe effect of price-based demand response on carbon emissions in European electricity markets: The importance of adequate carbon prices
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Price-based demand response (PBDR) has recently been attributed great economic but also environmental potential. However, the determination of its short-term effects on carbon emissions requires the knowledge of marginal emission factors (MEFs), which compared to grid mix emission factors (XEFs), are cumbersome to calculate due to the complex characteristics of national electricity markets. This study, therefore, proposes two merit order-based methods to approximate hourly MEFs and applies it to readily available datasets from 20 European countries for the years 2017-2019. Based on the resulting electricity prices, MEFs, and XEFs, standardized daily load shifts were simulated to quantify their effects on marginal costs and carbon emissions. Finally, by repeating the load shift simulations for different carbon price levels, the impact of the carbon price on the resulting carbon emissions was analyzed. Interestingly, the simulated price-based load shifts led to increases in operational carbon emissions for 8 of the 20 countries and to an average increase of 2.1% across all 20 countries. Switching from price-based to MEF-based load shifts reduced the corresponding carbon emissions to a decrease of 35%, albeit with 56% lower monetary cost savings compared to the price-based load shifts. Under specific circumstances, PBDR leads to an increase in carbon emissions, mainly due to the economic advantage fuel sources such as lignite and coal have in the merit order. However, as the price of carbon is increased, the correlation between the carbon intensity and the marginal cost of the fuels substantially increases. Therefore, with adequate carbon prices, PBDR can be an effective tool for both economical and environmental improvement.
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Renewable-dominant power systems explore options to procure virtual inertia services from non-synchronous resources (e.g., batteries, wind turbines) in addition to inertia traditionally provided by synchronous resources (e.g., thermal generators). This paper designs a stochastic electricity market that produces co-optimized and efficient prices for energy, reserve and inertia. We formulate a convex chance-constrained stochastic unit commitment model with inertia requirements and obtain equilibrium energy, reserve and inertia prices using convex duality. Numerical experiments on an illustrative system and a modified IEEE 118-bus systems show the performance of the proposed pricing mechanism.
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We formulate an equilibrium model of intraday trading in electricity markets. Agents face balancing constraints between their customers consumption plus intraday sales and their production plus intraday purchases. They have continuously updated forecast of their customers consumption at maturity with decreasing volatility error. Forecasts are prone to idiosyncratic noise as well as common noise (weather). Agents production capacities are subject to independent random outages, which are each modelled by a Markov chain. The equilibrium price is defined as the price that minimises trading cost plus imbalance cost of each agent and satisfies the usual market clearing condition. Existence and uniqueness of the equilibrium are proved, and we show that the equilibrium price and the optimal trading strategies are martingales. The main economic insights are the following. (i) When there is no uncertainty on generation, it is shown that the market price is a convex combination of forecasted marginal cost of each agent, with deterministic weights. Furthermore, the equilibrium market price follows Almgren and Chrisss model and we identify the fundamental part as well as the permanent market impact. It turns out that heterogeneity across agents is a necessary condition for the Samuelsons effect to hold. (ii) When there is production uncertainty, the price volatility becomes stochastic but converges to the case without production uncertainty when the number of agents increases to infinity. Further, on a two-agent case, we show that the potential outages of a low marginal cost producer reduces her sales position.
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