Electricity Markets

19 April 2023

DelftUniversity ofTechnology

Electrical Power System Essentials

ET2105 Electrical Power System EssentialsDr.ir. Pieter Schavemaker

Electricity Markets

27. Electricity Markets | 13

Electrical Power System Essentials ET2105

Concepts of The E-market

• Possible and desirable to separate the transportation from the thing transported

• Electricity product

• Transmission service

37. Electricity Markets | 13

Electrical Power System Essentials ET2105

E-market Other Markets

• Buyers and sellers agree on a price

• 1 Big difference:Electricity cannot be stored in large quantities impact on prices

• Factors that complicate the ‘product’

• Electricity cannot be labelled• Power flows cannot be controlled by financial instruments

47. Electricity Markets | 13

Electrical Power System Essentials ET2105

Organization

tradetrade

exportexportimportimport

primaryprimaryenergyenergy productionproduction

consumptionconsumption

transmission & distributiontransmission & distribution

system servicessystem services

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Electrical Power System Essentials ET2105

PX – Power eXchangeDAM – Day Ahead Market

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Electrical Power System Essentials ET2105

Market Clearing

0

10

20

30

40

50

60

70

80

90

0 50 100 150 200 250 300

Volume [MWh]

Pri

ce [

Eu

r]

MCV

MCP

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Electrical Power System Essentials ET2105

APX

87. Electricity Markets | 13

Electrical Power System Essentials ET2105

The Single Electricity Market

Goal:Maximize the socialwelfare in Europe

97. Electricity Markets | 13

Electrical Power System Essentials ET2105

Social Welfare

Quantity

QNL

Price

PNL

NL

demand

supply

Quantity

Price

PDE

DE

demand

supply

QDE

Social welfare =

benefits of the buyers - costs of the sellers

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Electrical Power System Essentials ET2105

Increase the Social Welfareby Import and Export

DE: export

Price

demand

supply

Quantity

PDE

QDE

PDE*

QDE*

Price

PDE

Export

Import

Net export curve

117. Electricity Markets | 13

Electrical Power System Essentials ET2105

Increased Social Welfareby Import and Export

Price

ExportImport

DE

NL

NL

ImportExport

P*

Q*

127. Electricity Markets | 13

Electrical Power System Essentials ET2105

If the Interconnector Capacity is not Sufficient . . .

Price

ExportImport Q* = ATC

DE

NL

ImportExport

PNL*

PDE*

137. Electricity Markets | 13

Electrical Power System Essentials ET2105

Congestion management

congestionmanagement

non-market based market based

implicit auction

zonal pricing

market coupling market splitting

nodal pricing

explicit auctions