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Energy Systems and Technologies for the Coming Century ...

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Development of market design with focus ondem<strong>and</strong> side participationNiels Christian Bang, Felicia Fock, <strong>and</strong> Mikael Togeby (Ea <strong>Energy</strong> Analyses)AbstractIn <strong>the</strong> current Nordic electricity market, large electricity end-users can adjust <strong>the</strong>irelectricity consumption in relation to <strong>the</strong> day-ahead market. The process isstraight<strong>for</strong>ward as <strong>the</strong> end-user can act on published prices <strong>and</strong> no communication isneeded. The retailer simply buys electricity on behalf of all its customers based onhistorical data. This uncomplicated process deals with price dependent consumption witha minimum of communication <strong>and</strong> administration.In o<strong>the</strong>r markets, e.g. <strong>the</strong> market <strong>for</strong> regulating power, dem<strong>and</strong> is in practice excluded.Various rules – that have been developed <strong>for</strong> traditional power plants – hinder electricityconsumers in participating. Electricity dem<strong>and</strong> can be a superior resource <strong>for</strong> regulatingpower as <strong>the</strong> dem<strong>and</strong> can be controlled in seconds <strong>and</strong> is particularly efficient <strong>for</strong> shortterm adjustments. Fur<strong>the</strong>rmore, <strong>the</strong> price variations are higher in <strong>the</strong> regulating powermarket than in <strong>the</strong> day-ahead market, so <strong>the</strong> economic incentive <strong>for</strong> adjusting <strong>the</strong> dem<strong>and</strong>is also higher.This paper will describe <strong>the</strong> current market <strong>for</strong> regulating power, <strong>the</strong> structure of <strong>the</strong>dem<strong>and</strong> <strong>for</strong> regulating power, <strong>and</strong> <strong>the</strong> obstacles <strong>for</strong> dem<strong>and</strong> to participate. TheFlexPower project involves <strong>the</strong> design <strong>and</strong> simulation of a new market <strong>for</strong> regulatingpower. One of <strong>the</strong> core aspects focuses on how a new regulating power market, whichcan work as a supplement to <strong>the</strong> existing market, can be designed.The principle idea is to expose end-users to five-minute prices <strong>and</strong> that it is voluntary <strong>for</strong><strong>the</strong>m to react. As such, <strong>the</strong> end-user does not have to send in plans or submit bids. In thisway <strong>the</strong> system is easy to use <strong>and</strong> unbureaucratic <strong>for</strong> <strong>the</strong> end-users. This is expected tobe essential <strong>for</strong> <strong>the</strong> potential end-users. The balance responsible is expected to predict <strong>the</strong>change in dem<strong>and</strong> based on historical data – as is done today in <strong>the</strong> spot market.Risø International <strong>Energy</strong> Conference 2011 Proceedings Page 117

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