The impact of electricity market design on periodic network frequency excursions

In an electrical power system there must always be a balance between generation and load of electricity. Any mismatch between generation and load will, in a synchronous system, instantaneously lead to a deviation of the grid frequency from its nominal value in the whole system. It is observed that grid frequency deviations occur at hourly and half-hourly transitions, especially during morning and evening hours when the rate of change of load is high. The origin of these frequency deviations lies in the economic dispatch of generation which is ever more cost optimized. As generation companies have the obligation to provide a certain amount of energy per trading period (defined as Program Time Unit), they have little (or no) incentive to follow the power demand profile and therefore rather optimize their generation based on this energy constraint, which results in stepwise power generation profiles. The restructuring of the electricity business is considered a plausible cause for this, as it provides an incentive to further optimize the economic dispatch without taking into account mismatch between generation and load within the program time unit.