As the electricity grid evolves to incorporate higher penetration levels of intermittent and inflexible sources, the real-time mismatch between supply and demand will increase dramatically. The key market instrument to resolve these mismatches is the balancing mechanism, providing a means for the system operator to contract market participants to achieve system balance, and to reconcile and settle between stakeholders after the event. Crucially, prices within balancing mechanisms are expected to increase dramatically as the broader power system decarbonises. This situation offers a great opportunity for decentralised energy resources, which may be able to provide the required generation or demand from a large number of aggregated small-scale resources. This work aims to present the evidence on decentralised participation in balancing markets, and go on to model the price in balancing markets in future grid decarbonisation scenarios, and the impacts of integrating DERs to help balance power mismatch.
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