Day-Ahead Versus Intraday Valuation of Demand-Side Flexibility for Photovoltaic and Wind Power Systems

FCN Working Paper No. 17/2014

38 Pages Posted: 28 Jan 2015

See all articles by Ernesto Garnier

Ernesto Garnier

RWTH Aachen University

Reinhard Madlener

RWTH Aachen University

Date Written: November 1, 2014

Abstract

This paper explores the economic benefits that wind and photovoltaic power plant operators can extract from the activation of flexible loads during their market operations. We compare two alternatives: (1) use of flexible loads to maximize relative day-ahead market value by shifting the portfolio balance in view of day-ahead price developments; (2) use of flexible loads in intraday operations to minimize the costs incurred when balancing forecast errors. We find that the latter option yields greater value than the former, both from an analytical and a market data perspective. On these grounds, we propose a model to shift loads before trading production forecast errors in continuous-trade intraday markets under uncertainty. In an illustrative example, the model is applied to simulate the trade operations of a small-scale wind power operator in the German power market with access to a limited pool of flexible loads in the household segment. The simulation demonstrates that demand-side flexibility can yield significant cost reductions; the extent is influenced by the volatility of prices and the time spans across which loads can be shifted.

Suggested Citation

Garnier, Ernesto and Madlener, Reinhard, Day-Ahead Versus Intraday Valuation of Demand-Side Flexibility for Photovoltaic and Wind Power Systems (November 1, 2014). FCN Working Paper No. 17/2014. Available at SSRN: https://ssrn.com/abstract=2556210 or http://dx.doi.org/10.2139/ssrn.2556210

Ernesto Garnier (Contact Author)

RWTH Aachen University ( email )

Templergraben 55
52056 Aachen, 52056
Germany

Reinhard Madlener

RWTH Aachen University ( email )

School of Business and Economics / E.ON ERC
Mathieustra├če 10
Aachen, 52074
Germany
+49 241 80 49 820 (Phone)
+49 241 80 49 829 (Fax)

HOME PAGE: http://www.eonerc.rwth-aachen.de/fcn

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