Balancing and Adequacy, and Implications for Regional Cooperation
Security of electricity supply is a paramount policy objective in the European Union (EU) Member States, along with sustainability and affordability. In turn, a central component of security of supply is resource adequacy. Yet the standards for defining resource adequacy in the EU are currently ambiguous at best. The Institute for Sustainable Development and International Relations (IDDRI) invited Mike Hogan to shed light on both resource adequacy and the role of regional cooperation.Mr. Hogan emphasizes that regulators must not only consider what constitutes reserve margins when defining “adequacy,” but also how much capacity credit is given to renewable energy sources, whether demand response is included in the calculation, the level of energy efficiency assumed, and similar aspects of the equation. A robust methodology will feature transparent, standardized methods of assessing resource adequacy, specifically including demand response and energy efficiency as resources. Faced with an objective of maintaining secure supply at least cost in an increasingly decarbonized power sector, it is also critical to differentiate between capacity and resource capabilities, assigning priority to resources with higher operational flexibility. The right mix of resources and wide-area regional imbalance markets can be utilized to leverage a current surplus of energy in the European market.