Optimal Production Balance with Wind Power

Maintaining a continuous balance between generation and load is crucial for the safeguarding of the power system. To efficiently deal with uncertainties and unexpected events the TSOs procure balancing services through the so-called balancing markets.The variability and low predictability of the wind speed makes handling of balances a difficult task for wind power producers. Literature regarding the development of the balancing market and Elbas is presented. This research has found that the volatility in the balancing market are expected to increase as a result of cross-border integration of such markets. The low liquidity in the Norwegian Elbas market are expected to rise, as the need of an intraday market becomes more imminent. With increased investments in renewable energy and cross- border capacity the balancing markets are expected to change. With higher volatility in the markets the balancing of production will come at a higher cost. In this report the current wind power balancing done by TrønderEnergi is presented and some possible improvements to better handle the balance, are drafted.The wind power production error and the price in the balancing market are modeled. A Monte Carlo analysis is carried out for three different alternatives:1. Settling the imbalances in the balancing market.2. Settling the imbalances in Elbas.3. Settling the imbalances by using the re-bidding procedure.The parameters are modeled stochastically, so the simulations are carried out a large number of times to get conclusive results.It is the findings of this thesis that the implemented two-price system in the production balance leads to a large deficit when balancing the wind power production. The procedure currently used at TrønderEnergi saves the company a significant amount per annum, but as Elbas matures, this market should be exploited for reducing the costs of balancing and possibly profit seeking operations