Impact of unpredictable renewables on gas-balancing design in Europe
Title: Impact of unpredictable renewables on gas-balancing design in Europe
Citation: Applied energy, 2014, Vol. 119, pp. 266-277
Series/Number: [Florence School of Regulation]
ISSN: 0306-2619; 1872-9118
The gas system in Europe is facing increasing unpredictability due to the interactions with the electricity generation system. Indeed, gas fired power plants make up an important back-up technology to deal with intermittency induced by wind-power integration. Therefore, the flexibility needs with respect to unpredictable power generation are actually transferred to the gas market. Applying the well-known electric power generation concepts of 'unit commitment' and 'dispatching' to the gas market, a hypothetical gas-transmission system has been modeled to verify, first, the physical impact of wind power forecasting errors on the gas system, and, second, its effect on the organization of gas-imbalance settlement for non-market-based and market-based design options. Increasing unpredictability leads to more expensive physical balancing of the gas system. These costs should be borne as much as possible by those effectively causing them. From a regulatory point of view in the European context, cost recovery by means of non-market-based settlement faces the problem of defining an appropriate cost-neutral penalty that covers the balancing costs and incentivizes shippers. Market-based settlement relates the variable imbalance tariffs to the actual system imbalance and thus any factor that strongly impacts on the system state like unpredictability. However, this mechanism raises imbalance-settlement tariffs for all unbalanced gas network users, even if the major source of unpredictability is a clearly identifiable shipper.
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