The impact of microgeneration upon the Dutch balancing market

Abstract

The share of microgeneration (power generation at the level of households and small businesses) in the Dutch electricity system continues to grow. Over time, this development may pose a threat to the reliability and efficiency of the Dutch electricity balancing market. We investigated possible changes to the design of the Dutch balancing market that can maintain or even improve upon its current operational performance level. The first step of the research was an analysis of the existing Dutch balancing market. It consists of three main instruments: programme responsibility, the single buyer market for regulating and reserve power (RRP), and imbalance settlement. The balancing market currently functions satisfactorily. Subsequently, the effects of large-scale development of microgeneration in the Netherlands were evaluated with a qualitative scenario analysis. Four microgeneration scenarios and two methods for allocating the household electricity consumption and generation were considered. The four scenarios concerned large-scale penetration of PV, heat-led micro CHP, electricity-led micro CHP operated by the household consumer, and electricity-led micro CHP operated by the supply company. The last scenario was found to have the strongest positive net effect. Finally, six design options were identified for improving the Dutch balancing market design in case the share of microgeneration would increase substantially. Of these six options, adjusting the profile methodology and the regulation of smart meters are no-regret options that can be implemented immediately. The attractiveness of the other options depends upon the microgeneration portfolio that emerges, the manageability of large metering data flows, and the nature of the technical effects of large-scale microgeneration penetration.