Economic evaluation of offshore wind power in the liberalized Dutch power market

Abstract

The variability and limited predictability of wind power challenges the operation of power systems, where the generation and load are required in balance at all times. The transmission system operator (TSO) is the responsible party. In a liberalized energy sector, key technical elements of power system operation have been transferred to markets and are thereby translated into economic responsibilities born by all system parties. The Dutch TSO TenneT operates the 15 min interval real-time system balancing the market platform where energy responsibilities are economically assessed. Market parties subject to programme responsibilities with wind power as part of their generation portfolio must bear the integration costs of wind power’s variability and forecast errors. The question arises what the real value of wind power is in the market. In this paper, a straightforward approach is used for the economic evaluation of existing wind power, taking Dutch market as a case study. Factual production data are obtained from a 108 MW offshore wind farm. Two variations of persistence forecast model are applied for the assessment of wind power value, which is quantified using price data on the Dutch wholesale markets and the TSO’s balancing market. It is found that presently in The Netherlands, wind power is a price-taker with a value equalling 90–110% of averaged market prices, including the imbalance cost component. The right-skewed distribution of APX (Amsterdam Power eXchange) spot market prices is found to reduce the market value of wind power. The impact of forecast errors on overall wind power value is low due to the small impact of wind power on short-term wholesale market prices.