Study about the price limit of RES orders

Supporting renewable energy sources is currently a widely discussed issue. To ensure the pay-off from the application of renewable energy technologies in Hungary, a feed-in-tariff supporting system has been created applying obligatory offtake. It means that the Hungarian TSO has to buy the energy from the producer at a definite price. TSO sells the energy on the day-ahead market and on the intraday market, but this paper focuses only the day-ahead. In general the market clearing price (MCP) is lower than this definite price so the TSO sells the energy at a loss. According to governmental regulations the TSO must be neither profitable nor loss-making so this deficit is allocated to the industrial customers. Limit price is one of the many regulations pertaining to the trading the Hungarian Power Exchange (HUPX DAM) meaning the energy cannot be sold when the MCP is lower than the limit price. If the energy cannot be sold, the TSO will face with high balancing costs. The aim of this paper is to find a way to minimize balancing costs and the amount of balancing energy, either by the modification the limit price or by giving a price-taker offer. Although the KAT system was discontinued on 31 December 2016, the contracted producers still remained within the framework. The authority approved 2000 MW capacity to build in, giving actuality to the topic.