IEEJ：October 2019 © IEEJ2019

Wholesale market integration of Renewableenergy generation

The Institute of Energy Economics, Japan
Junichi Ogasawara, Senior Research Fellow

Wholesale market in Japan and Germany
 In Japan and Germany, after day-ahead spot trading (auction), Intraday spot trading (mainlycontinuous) start. Before day-ahead spot trading, TSO procure primary reserves andsecondary reserves before week-ahead and tertiary reserves before day-ahead spot trading.
 It is difficult to deal with a large amount of renewable energy forecast errors using intraday
continuous trading. In Japan, we discuss to use tertiary reserves.
10:00 or 12:00

D-10:00

D0:00

Day-ahead spot market process
BidGateClose

AuctionIntraday spot market process
Bid（Lead time 1hour or 15min or 5min)
Intraday Continuous（and Partially intraday auction inGermany）

Control power market process
Weekahead Bid

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Bid

Primary reserve・ Secondary reserve（Partially Tertiary reserve in Japan）
Tertiary reserve1Forecast errors of wind power and solar power in Germany(2018)
 Since output of wind power generation / solar power generation is determined by weatherconditions, ふぉforecast errors occur between day-ahead forecast and actual output basedon deviations of weather forecasts. Although it is rare, very large forecast errors occur.
PV forecast error

Wind power forecast error

100.00%100.00%10.00%
10.00%
1.00%
1.00%
0.10%

-14.2%～19.5% of Windpower generation
capacity (56.7GW in2018)

0.01%

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0.00%

-9-7-5-3-11357

9

0.10%

11GW
Note: Forecast errors= Real output – Day-ahead forecast
Sources: ENTSO-E, “Transparency Platform”

0.01%-10.9%～10.9% of Solarpower generation
capacity (42.8GW in2018)-5.0 -4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0 4.0 5.0

GW
Note: Calculated from 4:45 to 21:45

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Intraday auction market in Italy and Spain
Italy and Spain established multi-step intraday auction markets. After Day-ahead spot market,
they can trade same 24hours auction products and they can trade multi-hours auction products on
the day.
 They can easily modify the power generation plan based on the results of the day-ahead spot
market and can modify generation schedules including to start/stop of generation plants.
※ European commission’s study,” The future electricity intraday market design”（2019/2）
recommends this method.
D-1

10:00

0:00

D

0:00

Day-ahead spot market process
Bid

Gate
Close

Intraday spot market process
Bid

Gate
Close
Bid

Gate
Close

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Bid
3 hours before
delivery (generationplant start-up time)

Gate
Close
Bid

Gate
Close
Bid

Gate
Close

3Short-term Unit Commitment of CAISO
Short-term Unit Commitment (STUC)IEEJ © 2019

Extend the STUC

 CAISO's real-time market consists ofthree steps.
 Short-term Unit Commitment: CAISO
evaluates generation schedules at 15minute intervals 4.5 hours before andissues binding start-up instructions basedon resources’ start-up times if necessary.
 Fifteen-Minute Market: The security
constrained economic dispatch used by
the CAISO on a 15-minute basis as a partof the RTUC process to determine 15minute settlements and clear bids forenergy and ancillary services.
 Real-Time Dispatch: The security
constrained economic dispatch used by
the CAISO on a 5-minute basis tocalculate LMPs and determine whichancillary service and imbalance energy
resources to dispatch.
※ The CAISO proposes to extend theshort-term unit commitment horizon
from 4.5 hours to 18 hours.

Source: CAISO, “Extended Short-Term Unit Commitment Draft
Final Proposal”, 2018/34

2019/3/29～31 Renewable curtailments in CAISO
As increasing on-site PV
generation, Grid load decreasing

GW

28
26

Mainly hydro power
generation out-side area

24
22
20
1816
14
12
10
8
6
4
2-2

0:00
1:35
3:10
4:45
6:20
7:55
9:30
11:05
12:40
14:15
15:50
17:25
19:00
20:35
22:10
23:45
1:20
2:55
4:30
6:05
7:40
9:15
10:50
12:25
14:00
15:35
17:10
18:45
20:20
21:55
23:30
1:05
2:40
4:15
5:50
7:25
9:00
10:35
12:10
13:45
15:20
16:55
18:30
20:05
21:40
23:15

0

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3/29
NuclearThermal

3/30
Hydro

Solar

Wind

Other RE

Source: California ISO, “Historical wind and solar curtailment”

ImportCurtailment

3/31
Load

Net Load
5Conclusion Rarely large-scale prediction errors of wind power generation and solar powergeneration occured. It is effective to 1) widen intraday market and balancing
market and 2) review unit commitment before several hours.
 When the ratio of solar power generation is large, the net load (load -wind
power / solar power generation) becomes “duck-curve”. It is needed to deal
with twice peak in the morning and evening and change significant generation
schedules including start/stop generation units if the weather forecast deviates
greatly.

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 In Japan, the forecast error of renewable energy generation will be dealt within the framework of tertiary reserves. This type is not reflected in the pricemechanism. The mechanism introduced this time can be dealt with within theframework of wholesale spot markets.
 As variable renewable energy generation increases, several challenges arise.
The US views that the value of renewable energy power generation (= REC)
does not reflect the status of renewable energy power generation output andhourly marginal CO2 reduction costs, and that there is distortion in energy
markets prices and capacity market prices are spreading. I believe that further
research is needed on how to create purchase prices for renewable energy
power generation.
Contact :report@tky.ieej.or.jp

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