Requirements for strategic reserves in a liberalized market with wind power

Abstract

The requirements concerning the reliability in power supply are high. This chapter addresses the issue of system adequacy, i.e., the need of enough installed capacity in each area to meet the load with an acceptable reliability. The challenge in liberalized markets is that the utilization time of rarely used peak units is so low that they will require extreme prices in order to be profitable. This has led to different methods including the creation of different types of capacity markets. The aim of this chapter is to analyze the connection between peak prices, system adequacy, needed size of a strategic reserve, i.e., the volume of the capacity market, and the impact of wind power on strategic reserves. The chapter uses data from Sweden to perform a detailed analysis of the influence of renewable generation on the capacity adequacy requirements for three different situations.