Powering Europe - European Wind Energy Association

Integrationofwindpowerineurope:thefacts
comprehensive EU market integration strategy by implementing
a target model and roadmap covering forward,
day-ahead, intraday and balancing markets as
well as capacity calculation and governance issues.
Regional Initiatives should converge into a single European
market by 2015, as per the European Commission’s
target 14 . Furthermore, a single central auction
office could be established in the EU.
Further market integration and the establishment of
intra-day markets for balancing and cross border trade
are highly important for integrating large amounts of
offshore wind power.
A suitable legal and regulatory framework is required
to enable efficient use of the interconnectors between
participating countries. The adoption of the Third Liberalisation
Package in 2009 should accelerate the
much needed reform of EU electricity markets and encourage
the take-up of higher amounts of renewables,
notably through the clear list of tasks it provides for
TSOs and energy regulators. Network codes established
in consultation with the market stakeholders
should allow wind energy and other variable renewables
to be integrated on a level playing field with other
forms of generation.
Power systems with wind energy penetration levels of
10-12% of gross electricity demand also need slower
power plants (with start-up times above one hour)
to participate in the intra-day rescheduling, as well as
more flexible plants.
An international exchange of reserves in Europe would
bring further advantages. The trade-off between saving
money on flexible power plants and sharing of reserves
across borders should be investigated with
dedicated models.
The ongoing market integration across Europe - notably
the establishment of regional markets - is an important
building block for a future power system characterised
by flexible and dynamic electricity markets,
where market participants - including at the level of
20
power demand - respond to price signals, fuel price
risk and carbon price risk. Ongoing initiatives at regional
level such as the Nordpool market, the Pentalateral
Energy Forum, the Irish All-Island market and
the Iberian MIBEL are all helping the integration of bigger
amounts of variable renewables. The “North Seas
Countries’ Offshore Grid Initiative” offers a way to create
a North Sea market enabling the integration of
large amounts of offshore wind power.
Redesigning the market in order to integrate maximum
quantities of variable wind power would yield significant
macro-economic benefits, through the reduction
of the total operational cost of power generation. Intraday
rescheduling of generators and application of intra-day
wind power forecasting for low reserve requirements
results in savings in the order of €250 million
per year. The annual savings due to rescheduling power
exchange for international trade would be in the order
of €1-2 billion 15 .
• Transparent and regularly updated information should
be available to all market players in order to analyse
the best market opportunities. It will not only ensure
fairer market behaviour, but also provide for the best
possible imbalance management in a market-based
and non-discriminatory way.
• Adequate mechanisms for market monitoring should
be put in place. Consequently, the authorities must
have full access to all relevant information so they can
monitor market activities and implement any ex-post
investigations and necessary measures to mitigate
market power or prevent it potentially being abused.
4.5 The merit order effect of
large-scale wind integration
When there is a lot of wind power on the system, electricity
wholesale market prices go down due to the socalled
merit order effect (MOE). Results from power
market modelling show that with the expected wind
14 See for example: EU commissioner for Energy Oettinger’s speech in March 2010: ‘An integrated and competitive electricity market:
a stepping stone to a sustainable future’ (SpEEch/10/102).
15 See the TradeWind project report: ‘Integrating Wind: Developing Europe’s power market for the large-scale integration of wind power’
(www.trade-wind.eu).
Powering Europe: wind energy and the electricity grid