Impact of wind power on the power system imbalances in Finland

A study on the imbalance costs or payments that wind power producers pay on the one hand and the cost incurred for the power system on the other hand is presented. 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 forecast errors of wind power that result in imbalances have been combined with the system real net imbalance. Comparisons and discussion about the balancing costs of wind power depending on the wind penetration are provided. The results for Finland show that a two-price system for imbalances results in higher imbalance costs than a one-price system. At low wind power penetration levels, the difference in imbalance payments is high for one- and two-price system. When wind penetration increases, there is not so much difference in the different balance settlement rules used. According to the comparison between imbalance payments and system costs, the increase in system costs because of wind power is lower than imbalance payments for wind power producers when using either average prices for up- and down-regulation or the regulation prices that increase linearly with regulation demand.