Towards Balancing Market Integration: Conversion Process for Balancing Energy Offers of Central-Dispatch Systems

This paper presents a novel methodology for the conversion of balancing energy offers, submitted during the integrated scheduling process (ISP) of European central-dispatch systems, into replacement reserve (RR) standard products. The aim is to allow the integration of the balancing market of central-dispatch systems, where generating unit operating constraints and real-time dispatch lie in the responsibility of the TSO, with the pan-European balancing market mainly characterized by self-dispatch arrangements and portfolio-based market participation. To respect the diversified clearing rules of both systems, we propose a break-down of the one-shot RR clearing problem into four distinct steps: (a) a local RR quantity maximization process, where the maximum quantity of upward and downward RR balancing energy offered by each balancing service provider (BSP) is defined by the TSO subject to detailed unit operating limitations, (b) a local mandatory activation process, driven by binding unit constraints determined in the previous step, (c) a local conversion process, during which the ISP offers are converted into RR standard products, and (d) the purely economic RR clearing to obtain the activated volumes. Four different modeling approaches are constructed, the attained solution of which is compared with the one-shot techno-economic clearing benchmark currently applied in central-dispatch systems. The comparison indicates that the break-down process results coincide with the one-shot benchmark results, achieving identical social welfare and final unit dispatch, while additionally allowing less-costly Europe-wide cross-border activations of RR.