Balance of Power: Designing operational practices for balancing electricity markets with growing penetrations of renewable energy
Massive deployments of solar and wind generation mean that power systems worldwide are beginning to experience high penetrations of variable renewable energy. Given the challenges and opportunities posed by these resources to the effective and efficient balancing of supply and demand in power systems, policy-makers are revisiting the design of power system operational practices such as grid codes, system operator processes and, in jurisdictions with wholesale competition, electricity markets. In this thesis, I explore how policy-makers should approach designing operational practices for balancing electricity markets. Because the design process is complex, contested and contextual, I employ an empirical approach that leverages experience from the Australian National Electricity Market (NEM). Frequency control services are critical to ensuring that imbalances are quickly addressed. In this thesis, I first explore the features needed in arrangements for procuring frequency control services during energy transition. Through a comprehensive international review and an assessment of the NEM, I offer four insights on designing frequency control arrangements as power systems transition. Increased balancing flexibility will be required during energy transition. Market arrangements should be assessed to determine whether they can deliver sufficient flexibility. As a contribution to this assessment, I investigate how balancing flexibility capabilities in scheduling timeframes are changing during energy transition using historical and projected resource mixes for two regions of the NEM. Based on the findings, I recommend that policy-makers examine how existing arrangements can be augmented to elicit upwards flexibility provision, and that duration specifications and sustained footroom procurement be considered for reserve products. Market participants must be willing and able to offer balancing flexibility into wholesale spot markets. As such, I explore how market knowledge processes and participation rules can be configured to maximise balancing flexibility provision. From an analysis of centralised price forecasts from the NEM, I find that errors in these forecasts are increasing in frequency and severity and, as such, arbitrage revenues can be reduced by 15-60+% should these forecasts be used to guide battery energy storage scheduling. I recommend that policy-makers increase the frequency at which forecasts are published and consider market participation restrictions.
Prakash, Abhijith ; https://orcid.org/0000-0002-2945-4757
Power system operations, Balancing services, Frequency control, Operating reserves, Electricity market design, National Electricity Market, Power system flexibility, Variable renewable energy, Energy storage, Energy arbitrage, anzsrc-for: 400803 Electrical energy generation (incl. renewables, excl. photovoltaics)
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