Economic assessment of the participation of wind generation in the Spanish secondary market

Abstract

The aim of this paper is to analyse the profitability of wind technology to participate in the Spanish system frequency regulation, specifically in the secondary reserve. This participation is based on existing market rules. Firstly, a revision of the bibliography about the relevant technical possibilities of this technology is done. Then, a simulation study based on real data is made in order to evaluate the maximum possible profits. Later, a specific offer strategy is proposed and the profit is estimated based on statistical modelling and checked by simulating its performance using actual and forecast productions of a wind portfolio. This study brings into focus the critical role of the penalties because of not being able to fulfil the acquired regulation commitments. A more sophisticated strategy is proposed and simulated. It is concluded that under the current generation structure and regulatory framework in the Spanish system, expectation of benefits, although positive, is not very high. However, secondary regulation by wind generators might facility higher penetration levels of this technology. In the long term, without or greatly decreased wind generation subsidies and higher needs and prices of regulation reserves, regulation-related profits might become a sizeable fraction of total profits of wind generators.

The aim of this paper is to analyse the profitability of wind technology to participate in the Spanish system frequency regulation, specifically in the secondary reserve. This participation is based on existing market rules. Firstly, a revision of the bibliography about the relevant technical possibilities of this technology is done. Then, a simulation study based on real data is made in order to evaluate the maximum possible profits. Later, a specific offer strategy is proposed and the profit is estimated based on statistical modelling and checked by simulating its performance using actual and forecast productions of a wind portfolio. This study brings into focus the critical role of the penalties because of not being able to fulfil the acquired regulation commitments. A more sophisticated strategy is proposed and simulated. It is concluded that under the current generation structure and regulatory framework in the Spanish system, expectation of benefits, although positive, is not very high. However, secondary regulation by wind generators might facility higher penetration levels of this technology. In the long term, without or greatly decreased wind generation subsidies and higher needs and prices of regulation reserves, regulation-related profits might become a sizeable fraction of total profits of wind generators.