Implications from changing the priority dispatch for intermittent energy sources to a market based approach: application to the Spanish case

Abstract

This paper discusses the market designs that impact intermittent energy sources (IES) curtailment, such as negative prices, the priority dispatch rule for IES and compensation for IES curtailment. It also describes the approaches applied in some European countries and proposed designs of European institutions. An evaluation of different schemes for IES curtailment is assessed for the Spanish 2020 scenario by using a system operation model. The results show that negative prices and demand response decrease consumers' costs by from 1.54 to 1.6, depending on the curtailment compensation. Without curtailment compensation, existing IES units have similar or higher revenues, in comparison with current priority dispatch. Future installations will face higher curtailments. At the same time, consumers can potentially benefit from lower costs.This paper discusses the market designs that impact intermittent energy sources (IES) curtailment, such as negative prices, the priority dispatch rule for IES and compensation for IES curtailment. It also describes the approaches applied in some European countries and proposed designs of European institutions. An evaluation of different schemes for IES curtailment is assessed for the Spanish 2020 scenario by using a system operation model. The results show that negative prices and demand response decrease consumers' costs by from 1.54 to 1.6, depending on the curtailment compensation. Without curtailment compensation, existing IES units have similar or higher revenues, in comparison with current priority dispatch. Future installations will face higher curtailments. At the same time, consumers can potentially benefit from lower costs.