Evolution of Fundamental Price Determination within Electricity Market Simulations
Electricity prices are the key instrument for coordinating electricity markets. For long-term market analyses, price determination based on fundamental unit commitment simulations is required. Within the European wholesale market, electricity prices result from a market clearing, which finds a welfa...
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| Format: | Article |
| Language: | English |
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MDPI AG
2021-09-01
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| Series: | Energies |
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| Online Access: | https://www.mdpi.com/1996-1073/14/17/5454 |
| _version_ | 1797521444408655872 |
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| author | Lothar Wyrwoll Moritz Nobis Stephan Raths Albert Moser |
| author_facet | Lothar Wyrwoll Moritz Nobis Stephan Raths Albert Moser |
| author_sort | Lothar Wyrwoll |
| collection | DOAJ |
| description | Electricity prices are the key instrument for coordinating electricity markets. For long-term market analyses, price determination based on fundamental unit commitment simulations is required. Within the European wholesale market, electricity prices result from a market clearing, which finds a welfare-optimal price–quantity tuple considering a coupling of multiple market areas with limited transmission capacity. With increasing exchange capacities in Europe, the precise modeling of the market coupling is required. Many market simulation models use multi-stage approaches with a separation of market coupling and price determination. In this paper, we analyze a new single-stage approach that combines both steps and theoretically and empirically demonstrate its precision by a backtest. For this purpose, we compare a simulated versus a historical electricity price distribution. Moreover, we explain the necessary adjustments for future regulatory developments of the European electricity market regarding flow-based market coupling and propose a concept for the application of future regulatory developments. We demonstrate further developments using a future scenario. |
| first_indexed | 2024-03-10T08:12:41Z |
| format | Article |
| id | doaj.art-6e9e8975ca18437b876eee7173b19924 |
| institution | Directory Open Access Journal |
| issn | 1996-1073 |
| language | English |
| last_indexed | 2024-03-10T08:12:41Z |
| publishDate | 2021-09-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Energies |
| spelling | doaj.art-6e9e8975ca18437b876eee7173b199242023-11-22T10:34:54ZengMDPI AGEnergies1996-10732021-09-011417545410.3390/en14175454Evolution of Fundamental Price Determination within Electricity Market SimulationsLothar Wyrwoll0Moritz Nobis1Stephan Raths2Albert Moser3Institute for High Voltage Equipment and Grids, Digitalization and Energy Economics (IAEW), RWTH Aachen University, 52062 Aachen, GermanyTrianel GmbH, 52070 Aachen, GermanyAmprion GmbH, 44263 Dortmund, GermanyInstitute for High Voltage Equipment and Grids, Digitalization and Energy Economics (IAEW), RWTH Aachen University, 52062 Aachen, GermanyElectricity prices are the key instrument for coordinating electricity markets. For long-term market analyses, price determination based on fundamental unit commitment simulations is required. Within the European wholesale market, electricity prices result from a market clearing, which finds a welfare-optimal price–quantity tuple considering a coupling of multiple market areas with limited transmission capacity. With increasing exchange capacities in Europe, the precise modeling of the market coupling is required. Many market simulation models use multi-stage approaches with a separation of market coupling and price determination. In this paper, we analyze a new single-stage approach that combines both steps and theoretically and empirically demonstrate its precision by a backtest. For this purpose, we compare a simulated versus a historical electricity price distribution. Moreover, we explain the necessary adjustments for future regulatory developments of the European electricity market regarding flow-based market coupling and propose a concept for the application of future regulatory developments. We demonstrate further developments using a future scenario.https://www.mdpi.com/1996-1073/14/17/5454electricity price modelingLagrangian relaxationmarket couplingflow-based market couplingcounterintuitive flows |
| spellingShingle | Lothar Wyrwoll Moritz Nobis Stephan Raths Albert Moser Evolution of Fundamental Price Determination within Electricity Market Simulations Energies electricity price modeling Lagrangian relaxation market coupling flow-based market coupling counterintuitive flows |
| title | Evolution of Fundamental Price Determination within Electricity Market Simulations |
| title_full | Evolution of Fundamental Price Determination within Electricity Market Simulations |
| title_fullStr | Evolution of Fundamental Price Determination within Electricity Market Simulations |
| title_full_unstemmed | Evolution of Fundamental Price Determination within Electricity Market Simulations |
| title_short | Evolution of Fundamental Price Determination within Electricity Market Simulations |
| title_sort | evolution of fundamental price determination within electricity market simulations |
| topic | electricity price modeling Lagrangian relaxation market coupling flow-based market coupling counterintuitive flows |
| url | https://www.mdpi.com/1996-1073/14/17/5454 |
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