A Balancing Act: Developments in Dutch and German balancing markets and the impact of variable renewable generation.
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Injections to and withdrawals from the electricity grid should continuously be in balance to avoid large deviations from the reference grid frequency. In case of grid imbalance, transmission system operators (TSOs) activate balancing reserves to correct the imbalance. With increasing variable renewable generation, different model studies expect that balancing reserve capacity should increase to cover the larger forecast errors of variable renewable generation. However, different studies identified that balancing reserve capacity has decreased in the past, while variable renewable generation has increased. The goal of this study was 1) to provide an overview of developments in the Dutch and German balancing markets 2) study the relationship between different possible contributors, including variable renewable generation, and system imbalance, using 15-minute data between 2015 and 2017 for the Netherlands and Germany. The results showed that in both the Netherlands and Germany the penalty for being in imbalance has decreased over time. Imbalance volumes increased in the Netherlands, but stayed relatively constant in Germany. Market design seemed to have a major impact on these developments. Regression analyses were performed to study the relationship between variable renewable generation, total generation, total load, and the forecast errors of these factors on the one hand and system imbalance on the other hand. All regression analyses followed the expected trends (e.g. higher system imbalance with higher variable renewable generation), but the correlation values were weak. This indicated that the impact of variable renewable generation on imbalance volumes is limited