Potential Revenue from Reserve Market Participation in Wind Power- and Solar Power-Dominated Electricity Grids: The Near-Term, Mid-Term, and Long-Term

Journal article, 2024

As electricity systems become increasingly dominated by variable inverter-based generation (such as wind and solar photovoltaics (PV)), additional sources of variability appear, while the share of dispatchable thermal power plants decreases. Maintaining a stable grid frequency requires new sources of inertia to slow the frequency changes, as well as new sources of reserve power to counter the imbalances. This work uses a linear optimization modeling approach to analyze the reserve market of the electricity system during the transition to a carbon-free system with high shares of variable electricity generation. The modeling is performed for three regional contexts and with varying degrees of available flexibility technologies. As for the reserve supply, batteries, electrolyzers, electric boilers and heat pumps for district heating, curtailed wind and solar power, and hydropower and thermal power plants are all included. The results indicate that of these suppliers of reserves, the introduction of grid-scale batteries into the system drastically reduces the reserve market size. Only early in the transition is revenue from the reserve market greater than 5% of the total revenue for any technology. While the demand for reserves increases as the share of solar PV and wind power increases, the modeling reveals that access to flexible loads, storage units, and emulated inertia from wind power also increases. Depending on the choice of flexibility measures available, demand-side participation could play a major role in minimizing the cost of grid stability in the future.