Impact of wind power on the power system imbalances in Finland

This paper presents a study about the costs of balancing for wind power producers on the one hand and the cost incurred for the power system on the other hand. The general ideas about bidding in the electricity markets and paying balance settlement costs are illustrated with Nordic electricity market Nordpool and case data for one year in Finland. Both the producer side and the system side will be examined with case data on prediction errors, system net imbalances and the balancing costs. The up-scaled wind imbalances resulting from forecast errors have been combined with the system net imbalance. Comparisons and discussion about the balancing costs of wind power depending on the wind penetration is made. The results for case Finland show that two-price system for imbalances makes the imbalance costs clearly higher than one-price system. Both systems reflect the increase in costs as wind penetration increases. Increasing penetration level increases wind power prediction errors and they start to affect net system imbalances more. This can be seen also as the percentage of imbalances that are to the same side as system net imbalance. According to comparison, the increase in system costs due to wind power is lower than imbalance payments for wind power producers when using the average prices for up- and down-regulation, at least for up to 10 % penetration level in Finland.