Abstract
The transition to renewable energy sources poses unique challenges to power system operators, particularly in efficiently procuring reserves. This paper investigates the discrepancies between existing reserve procurement frameworks and the capabilities of emerging players such as storage and flexible demand in systems with high renewable penetration.
Using a characteristic example, we expose the inability of current reserve products to enable the new players to express their capabilities, which leaves them exposed to systemic risks. We then proceed to present a solution where a new type of reserve allows to bridge this discrepancy, enhancing the reliability and flexibility of the power system.
Our findings underscore the urgent need for a revised regulatory framework to accommodate the growing demand for ancillary services and harness the full potential of emerging technologies in renewables-and-flexibility-driven power systems.
The proposition: Energy Reserves
The paper introduces Energy Reserves, generalising the per-timeslot (power-capacity) reserves of today to energy-capacity reserves across time intervals. The core idea: a storage unit can offer its full energy (e.g., 30 MWh) as reserve in each timeslot, while the operator procures Energy Reserves across timeslots to ensure no scarcity of balancing energy. This avoids both the imprudent (treating storage as if it could deliver 30 MWh in every slot independently) and the over-conservative (dividing storage capacity equally across slots) approaches.
Why this matters
Reserve costs in Denmark escalated from an estimated 700M DKK in 2023 to 1.6B DKK actual, underscoring fiscal and operational pressure on the ancillary service market. As renewable penetration grows, the systemic risk created by mismatched reserve products is no longer theoretical – it has a balance-sheet impact.
Citation
Tsaousoglou, G., Hviid, J., Binder, H., & Madsen, H. (2024). On Reserve Markets in the Era of High Storage and Flexibility Penetration. In 14th IEEE PES Innovative Smart Grid Technologies Europe (ISGT Europe). IEEE. https://doi.org/10.1109/ISGTEUROPE62998.2024.10863568