The Belgian regulatory commission for electricity and gas (CREG) has recently published a study on the implementation of a scarcity pricing mechanism in Belgium. The study is the culmination of years of work of the Belgian reglator in this direction, including through collaboration with our team. The study attempts to justify the value of scarcity pricing in the European market and propose a workable solution for its implementation, given the existing structure of the EU balancing market.
The study is structured as follows:
- Chapter 1: relevant legal framework
- Chapter 2: description of the reasons which have led to the examination of a scarcity pricing mechanism in Belgium
- Chapter 3: chronology of the implementation of a scarcity pricing mechanism in Belgium
- Chapter 4: introduction to scarcity pricing, theoretical background
- Chapter 5: Justification of the choice of a scarcity pricing mechanism and of the proposed design
- Chapter 6: Description of the proposed design
- Chapter 7: Expected impact of the proposed mechanism
- Chapter 8: Legal compliance of the proposed design
- Chapter 9: FAQ
- Chapter 10: Implementation process
There have been a number of publications related to this effort, as well as a public consultation launched by the Belgian TSO ELIA. Here are a few relevant resources:
- A. Papavasiliou, G. Bertrand, Market Design Options for Scarcity Pricing in European Balancing Markets, IEEE Transactions on Power Systems, vol. 36, no. 5, pp. 4410-4419, September 2021
- A. Papavasiliou, Scarcity Pricing and the Missing European Market for Real-Time Reserve Capacity, The Electricity Journal, vol. 33, no. 10, September 2020
- A. Papavasiliou, Y. Smeers, G. de Maere d’Aertrycke, Market Design Considerations for Scarcity Pricing: A Stochastic Equilibrium Framework, The Energy Journal, vol. 42, no. 5, pp. 195-220, 2021
- A. Papavasiliou, Y. Smeers, G. Bertrand, An Extended Analysis on the Remuneration of Capacity under Scarcity Conditions, Economics of Energy and Environmental Policy, vol. 7, no. 2, 2018
- A. Papavasiliou, Y. Smeers, Remuneration of Flexibility under Conditions of Scarcity: A Case Study of Belgium, The Energy Journal, vol. 38, no. 6, pp. 105-135, 2017
- ELIA public consultation