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Tools for the Design and modelling of new markets and negotiation mechanisms for a ~100% Renewable European Power Systems

Periodic Reporting for period 2 - TradeRES (Tools for the Design and modelling of new markets and negotiation mechanisms for a ~100% Renewable European Power Systems)

Okres sprawozdawczy: 2021-08-01 do 2023-01-31

Europe’s renewable energy policies and the transition route towards a near 100 % renewable power system are the most ambitious in the world. The existing designs of most European electric energy markets were conceived for power systems based in conventional and fully dispatchable power technologies. Those markets relied on marginal-cost pricing to provide effective investment incentives and to efficiently deploy available resources. This principle became dysfunctional for power system with large shares of variable renewable energy sources (vRES) as wind and solar photovoltaic (PV) power. Being weather-dependent and essentially non-dispatchable, vRES in some periods may “flood” electricity markets with excess energy, causing the price to drop to zero or even negative.
The TradeRES project is developing and testing innovative electricity market designs that can meet society’s needs of a (near) 100% renewable power system. These will need to provide efficient operational and investment incentives for an electricity system that is characterized by the integration of new players and high: i) share of vRES; ii) integration with other energy sectors, and, iii) participation of flexible demand from consumers.
TradeRES will focus on the following ground-breaking objectives:
- Identify barriers and deficiencies of current pricing and energy market structures to support and finance future low-carbon energy systems and characterize long-term dynamics
- Calculate cost, value, and price structure of electricity in a ~100% renewable vRES-dominated electricity system for 2030 and beyond
- Conceive, design and model electricity markets that adequately deal with relevant temporal and spatial flexibilities
- Develop optimization and agent-based models beyond the state-of-the-art.
RP1: In the first reporting period (M1-M18) technical procedures were prepared and data gathering planned for a successful implementation of the workplan. A characterization of the European plans was performed to prepare the scenarios to simulate the foreseen case studies. A dataflow platform to be used in the simulation of European markets case studies and innovative designs was selected, and the models previously developed by the consortium’s members started to be adapted and new actors/agents to be modelled.
In the first period the consortium completed 23 deliverables and accomplished the first three milestones. The work developed contributed to several relevant impacts, by the engagement of stakeholders and presentation of the project’s objectives and expected activities. It also contribute to the ENTSO-E consultation of stakeholders on Options for possible Market Design evolutions in 2030 ( being later invited to present TradeRES’ views at ENTSO-E stakeholder’s workshop.
Although the project progressed well in the first period and according to the foreseen schedule, it should be referred the whole project was conducted under the COVID19 pandemic.

RP2: During the 2nd reporting period (M19 to M36), after the attainment of the overall 2 first goals of the project, the focus and activities were associated with steps 3 and 4 of the project’s methodology that involved i) the conclusion of development of a set of tools capable of simulating the performance of proposed market designs; and ii) the application of those tools to test the (1st iteration) of the proposed market designs in comparison to the reference cases.
The most relevant difficulties experienced in the second reporting period were associated with the unforeseen geo-political events, and the impact they had on the European electricity markets, on the research teams of TradeRES project, and on the contact with stakeholders - including the members of the Advisory Board.
In spite of the additional challenges, during the second reporting period project TradeRES completed the input database for the market simulations, constructed the scenarios, defined the first designs and “market bundles” to be applied to WP5 case studies and completed the interlink of market models. It also prepared all tools, tutorials and webinars and disseminated them. In total, TradeRES has produced 45 deliverables and 43 scientific articles since the beginning of the project and fully achieve milestones 4 and 5, and partly achieve milestones 6 and 7.
It is considered the overall workplan progressed steadily in the second reporting period, although it experienced some delays. Nevertheless, the unfortunate recent events in Europe proved the objectives and ambition of TradeRES’ project are even more relevant now, than at the beginning of the project, and the goals remain fully attainable and very close to be achieved, as the main difficulties were already overcome.
Although the renewable share in the European power systems is unique in the world, the path to a ~100% renewable energy system is still uncharted. It is still unclear how to raise the different flexibility potentials, from demand response to sector coupling. The role of short-term to real-time trading, like the adaptation of gate-closure times to forecasts, or of regional solutions like local energy marketing is still mostly unrevealed. Accordingly, the conditions for an efficient interplay of these diverse flexibility options need to be understood. New electricity market players such as aggregators or prosumers are still to unveil their full potential.
To explore all those features and provide landscape of future market designs, TradeRES project is developing optimization and agent-based models, which are paramount to reach all the objectives of the project. These models will include new features to simulate i) emerging new players (as aggregators and prosumers), and ii) spatial and temporal flexibility options, and iii) new market designs and products. These improvements are being tested into five different cases studies - local energy markets, the Iberian, Germany and Netherland markets, and at a pan-European scale, to provide valuable contributions to address the medium-term goals proposed by the European Union to all member-states and the society’s aspirations for more sustainable energy future. Those tools will be available for testing by relevant stakeholders. In addition, a user-friendly web-based market design decision-tool for policy-makers and other stakeholders will be provided by TradeRES.
As potential impacts, TradeRES will give insights regarding the implementation of 2030 Climate-Energy objectives and the recent approaches proposed in “Clean Energy for All European” package by enabling their simulation under market conditions. Moreover, it is expected to support the development of new directives and regulations to shape the energy system of the future. Among others, the following impacts are also expected:
- Enhance innovation capacity by providing improved open access tools that can be used by relevant players in future market conditions and address issues related to climate change
- Strengthen competitiveness and enhance growth of companies by giving access to and open-access market decision tools
- Bring benefits for society through the definition of efficient market designs leading to market efficiency, and cost reductions
TradeRES will strive to identify adequate designs and thus have an impact on energy system costs that are ultimately born by the consumers.
The TradeRES vision for an integrated market architecture.