Short-term balancing of supply and demand in an electricity system: forecasting and scheduling

Until recently, the modelling of electricity system operations has mainly focused on hour-by-hour management. However, with the introduction of renewable energy sources such as wind power, fluctuations within the hour result in imbalances between supply and demand that are undetectable with an hourly time resolution. Ramping restrictions on production units and transmission lines contribute further to these imbalances. In this paper, we therefore propose a model for optimising electricity system operations within the hour. Taking a social welfare perspective, the model aims at reducing intra-hour costs by optimally activating so-called manual reserves based on forecasted imbalances. Since manual reserves are significantly less expensive than automatic reserves, we expect a considerable reduction in total costs of balancing. We illustrate our model in a Danish case study and investigate the effect of an expected increase in installed wind capacity. We find that the balancing costs do not outweigh the benefits of the inexpensive wind power, and that the savings from activating manual reserves are even larger for the high wind capacity case.