Optimizing Bidding Strategies for the German Secondary Control Reserve Market: The Impact of Energy Prices

Resource type
Manuel Loesch, Sandeep Nainappagari, Julian Rominger, Hartmut Schmeck
Lodz, Poland
Book title
Proceedings of the 15th International Conference on the European Energy Market (EEM 2018)
In the synchronized European grid, Secondary Control Reserve (SCR) is a key component to restore a stable grid frequency of 50 Hz. The German SCR market is based on a capacity price and an energy price. After being accepted into the reserve pool based on the capacity price, the energy price determines the position in the call merit order, and hence the probability of an activation. In this paper we present results of an ex-post simulation of the SCR market, based on publicly available data. Using our simulation, we quantified the share of SCR bid activations given different energy prices, and derived the profit potential for SCR providers. In addition, we investigated the development over the last years, recognizing that in particular positive SCR bids with a given energy price tend to be activated less often. By providing transparency regarding the relation between reserve energy prices and the share of activations, the insights presented in this paper can be used by balancing service providers in order to improve their SCR bids, or to validate the quality of bidding strategies of SCR aggregators.
Research focus
Energy Management
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Published by
Manuel Lösch