Balancing market design for a decentralized electricity system: Case of the Netherlands

In liberalized electricity markets, a balancing mechanism is needed for maintaining the continuous balance between electricity production and consumption. Vital as balancing mechanisms-or balancing markets, in case market mechanisms are used for the procurement of reserves and the settlement of costs-are to the performance of liberalized power markets, they are relatively little studied. We have investigated the potential effects of a high percentage of domestic distributed generation (DG) in the Dutch electricity market on the operational performance of the balancing market. The results of the study can be used to improve the design of the balancing market in case the share of DG increases substantially. The analysis also provides more general insight into the balancing market design variables and constraints.