The European Network of Transmission System Operators for Electricity (ENTSO-E) published a position paper on offshore wind development in October, where it advocated applying a holistic perspective when choosing the market design concept for integrating large amounts of offshore wind generation. ENTSO-E considered three perspectives on market design: Market design efficiency – price formation to reflect true costs and market outcomes to reflect physical electricity flows. System operation efficiency – incentives for consumption and generation to have a balanced position and provide flexibility to the markets. Alignment with policy objectives. From here, the paper discusses the most prominent market design concepts: the Offshore Bidding Zone (OBZ) concept and the Home Market (HM) concept (see chart). The paper discusses the most prominent market design concepts: the Offshore Bidding Zone (OBZ) concept and the Home Market (HM) concept. In the OBZ concept, the offshore wind farm will be part of the exporting side of the market, and the price in the OBZ will be equal to the low price in the exporting zone. In the HM concept, the offshore wind farm will be part of the bidding zone of the HM, and therefore receives a potentially higher price. This means that there is no capacity constraint between the offshore wind farm and the HM bidding zone. The remaining transmission capacity of the hybrid configuration that is allocated to the market is reduced or increased, depending on the direction. ENTSO-E explains that the single feature that separates the two market design concepts from ...
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Market design concepts for offshore wind farms
Neil Mearns
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