Adjacent Markets Influence Over Electricity Trading—Iberian Benchmark Study

Abstract

This paper presents a study on the impact of adjacent markets on the electricity market, realizing the advantages of acting in several different markets. The increased use of renewable primary sources to generate electricity and new usages of electricity such as electric mobility are contributing to a better and more rational way of living. The investment in renewable technologies for the distributed generation has been creating new opportunities for owners of such technologies. Besides the selling of electricity and related services (ancillary services) in energy markets, players can participate and negotiate in other markets, such as the carbon/CO2 market, the guarantees of origin market, or provide district heating services selling of steam and hot water among others. These market mechanisms are related to the energy market, originating a wide market strategy improving the benefits of using distributed generators. This paper describes several adjacent markets and how do they complement the electricity market. The paper also shows how the simulation of electricity and adjacent markets can be performed, using an electricity market simulator, and demonstrates, based on market simulations using real data from the Iberian market, that the participation in various complementary markets can enable power producers to obtain extra profits that are essential to cover the production costs and facilities maintenance. The findings of this paper enhance the advantages for investment on energy production based renewable sources and more efficient technologies of energy conversion.