University of Oulu

Florian Kühnlenz, Pedro H.J. Nardelli, Santtu Karhinen, Rauli Svento, Implementing flexible demand: Real-time price vs. market integration, Energy, Volume 149, 2018, Pages 550-565, ISSN 0360-5442, https://doi.org/10.1016/j.energy.2018.02.024

Implementing flexible demand : real-time price vs. market integration

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Author: Kühnlenz, Florian1; Nardelli, Pedro H.J.2; Karhinen, Santtu3;
Organizations: 1Centre for Wireless Communications (CWC), University of Oulu, Finland
2Laboratory of Control Engineering and Digital Systems, School of Energy Systems, Lappeenranta University of Technology, Finland
3Business School at University of Oulu, Finland
Format: article
Version: accepted version
Access: embargoed
Persistent link: http://urn.fi/urn:nbn:fi-fe2019060418397
Language: English
Published: Elsevier, 2018
Publish Date: 2020-04-15
Description:

Abstract

This paper proposes an agent-based model that combines both spot and balancing electricity markets. From this model, we develop a multi-agent simulation to study the integration of the consumers' flexibility into the system. Our study identifies the conditions that real-time prices may lead to higher electricity costs, which in turn contradicts the usual claim that such a pricing scheme reduces cost. We show that such undesirable behavior is in fact systemic. Due to the existing structure of the wholesale market, the predicted demand that is used in the formation of the price is never realized since the flexible users will change their demand according to such established price. As the demand is never correctly predicted, the volume traded through the balancing markets increases, leading to higher overall costs. In this case, the system can sustain, and even benefit from, a small number of flexible users, but this solution can never upscale without increasing the total costs. To avoid this problem, we implement the so-called “exclusive groups”. Our results illustrate the importance of rethinking the current practices so that flexibility can be successfully integrated considering scenarios with and without intermittent renewable sources.

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Series: Energy
ISSN: 0360-5442
ISSN-E: 0360-5442
ISSN-L: 0360-5442
Volume: 149
Pages: 550 - 565
DOI: 10.1016/j.energy.2018.02.024
OADOI: https://oadoi.org/10.1016/j.energy.2018.02.024
Type of Publication: A1 Journal article – refereed
Field of Science: 512 Business and management
113 Computer and information sciences
222 Other engineering and technologies
Subjects:
Funding: This work is partly funded by Strategic Research Council/AkaBCDC Energia (n.292854) and by the European Commission through the P2P-SmarTest project (n.646469).
Copyright information: © 2018 Elsevier Ltd. All rights reserved. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/.
  https://creativecommons.org/licenses/by-nc-nd/4.0/