Because wind power and PV are intermittent energy sources, their dominance has introduced a new paradigm for power systems: Flexibility.
Flexibility is already an issue in Germany’s electrical system today. Dispatchable conventional power plants have to ramp up and down more frequently and more quickly, often operating at partial loads, and have to be turned on and off with greater regularity. As this paper shows, the need for flexibility is more pronounced in times of high wind and PV feed-in: with renewables constituting 33.1% of power generation in 2017, the share of RES-E has been as high as 88% and the share of wind and PV alone can be as high as 75%. A key question therefore is: Can the German power system remain reliable while keeping its costs reasonable when need for flexibility is high?
To manage the so-called flexibility challenge, wholesale power markets allow market participants to sell and buy electricity as prices rise and fall, ensuring an equilibrium between supply and demand. This paper explains how the German power system manages flexibility requirements with wholesale markets and explains the basic functioning and structure of these markets. Selected case studies of days when shares of variable renewables (vRES) fluctuate greatly are being analysed. The paper concludes with more general observations regarding the successful management of flexibility requirements using power markets.