The impacts of an integrated European adjustment market for electricity under high share of renewables

The European Commission has set a target of establishing an integrated Europe-wide electricity market for day-ahead and intraday transactions. However, there are still many open questions on the potential benefits of a Europe-wide intraday market integration and the harmonizing market rules. This paper intends to provide a precise insight into the potential impacts of EU policies regarding integrating electricity markets on market efficiency and on different market players with the aim of supporting policy makers to increase the penetration of renewables in a cost efficient manner. In this paper, we investigate and compare the current option of regional intraday electricity market with the option of an integrated Europe-wide one, with reference to the three European test cases with high renewable penetration: the Iberian electricity market including Spain and Portugal, the Italian electricity market including Italy and Slovenia, and the electricity market of Germany. We consider two 2030 scenarios: (i) the regional/local intraday electricity market, and (ii) the integration of the current regional intraday market of the test cases into a single intraday market in Europe. The two scenarios are modelled through stochastic Monte Carlo simulation, considering uncertainty on electricity demand, wind and solar power. The performance of the intraday market under the two options are compared in terms of generation cost, electricity prices, producer’ surplus, and load expenditure inside the European test cases. The simulation results lead to the conclusion that integrating to a Europe-wide intraday electricity market is not advantageous for power producers inside the European countries with high share of variable renewable generation, in terms of annual generation surplus. However, from the customers’ point of view, intraday market integration is beneficial, leading to lower cost to loads. Furthermore, it is shown that the flexibility provided by the installed capacity of hydro pumped-storage generators within Europe, by 2030, eliminates the planned curtailment of renewable energy sources in day-ahead and intraday markets and confines the impact of market integration on the market performance indicators.JRC.C.3-Energy Security, Distribution and Market