Exploring the design space of balancing services markets- a theoretical framework

This paper provides the theoretical foundation which is necessary to properly design balancing services markets, as part of power system ancillary services needed for secure and reliable operation of the electricity grid. The objective is to propose a generic framework that is applicable to design of balancing services markets for different power systems, regardless of electricity markets design differences in different countries/regions. Firstly, in order to analyze the effect of different decisions for each design variable on the performance of the whole market and eventually evaluate the performance of different alternative market designs, a set of performance criteria is proposed. Secondly, this paper identifies the variables on which a decision needs to be made in the design process; design variables identification. Based on the different possible options (states) for each design variable, the entire design space for each balancing service market is identified; design space identification. Finally, the relations between design variables and performance criteria are presented. The proposed framework functions as the basis for evaluating alternative balancing services market designs in future research.