*5.2. Energy Reserve Marketplace*

Again, as indicated in the previous subsection, the market time unit is assumed to be 15 min—that is, VRE producers submit bids for periods of 15 min. Specifically, WPPs offer their energy (MWh) at a near-zero price—that is, bids involve energy, instead of power—and the other market participants typically submit bids at higher prices. All bids are ranked with increasing price (merit-order). The transmission system operator, a non-commercial organization, independent of commercial players, constitutes the demand side. In case this agent is procuring up regulation, the up-regulation bids with lowest prices are activated until the procured quantity is reached. The price of the last up-regulated quantity sets the up-regulation price. The bids with prices below the up-regulation price have a profit, equal to the difference between the final regulation price and the offered price. A similar procedure is used to find the down-regulation price. Players are allowed to submit bids till 15 min prior to real-time operation. They are remunerated by the market-clearing price (tertiary reserve price). Table 3 presents some important features of this marketplace.


**Table 3.** Important features of the energy reserve marketplace.

Overall, VRE producers submit their deviations (MWh) to this marketplace and inform TSOs of the magnitude of the errors, thus avoiding to some extent the payment of large penalties (but see Section 8). It is worth noting that to increase competition in the market VRE producers may submit bids including a higher price (i.e., a price higher than a near-zero price). Specifically, for up-regulation, the price may be equal to the price of the first ranked offer (minimal price). For down-regulation, the price could be defined in a similar way (i.e., the price of the first ranked offer, or maximal price).
