Flexibility in short-term electricity markets for renewable integration and uncertainty mitigation: A comprehensive review
Lander Mentens, Herbert Peremans, Johan Springael, Philippe Nimmegeers
Abstract
Globally, the share of renewable energy sources in the electricity mix is increasing. However, higher levels of renewable energy sources and especially those with an intermittent nature introduce uncertainty in delivering reliable and secure electricity. Hence, flexibility becomes more important to counteract imbalances between generation and consumption. This review paper contributes to the nuanced ways in which flexibility can be strategically employed to navigate and mitigate uncertainties amid evolving market dynamics and increasing share of renewable sources in the energy mix. It investigates the impact of renewable energy sources on short-term electricity markets, with a specific focus on day-ahead, intraday, and balancing markets in the Central Western Europe region. It explores the design characteristics and parameters of these markets, emphasizing how these markets deal with the uncertainty arising from the limited predictability of renewable resources. In this context, flexibility becomes a crucial element in reducing this uncertainty. The primary objective is to fully understand and analyze the intricate interplay between the sequential short-term markets and the imperative for flexibility. First, the current short-term markets are discussed. Next, the paper examines how flexibility in its three dimensions (i.e., time, space, and demand-response) can strategically function to not only address but also proactively alleviate uncertainties within these markets. Advancements in market coupling, forecasting accuracy, and increased liquidity have significantly enhanced the efficiency of these markets, particularly in accommodating the growing presence of renewable energy sources.