Loading...

Helping you make sense of the energy and water sectors

Publications

Chart of the Week

2020

Market design concepts for offshore wind farms

Neil Mearns Senior Writer

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 ...

To keep reading, please log in to your account

Alternatively, please sign up to receive
free market insight online and direct
to your inbox



Who we work for