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→Day Ahead
In Germany, the electricity market operates using a "day-ahead" scheduling system and a "merit order" mechanism to determine the dispatch of power plants and the pricing of electricity. Here's an overview of both concepts:
#Day-Ahead Scheduling - <br />The day-ahead scheduling system allows market participants, including generators, retailers, and traders, to submit their electricity supply and demand forecasts for the next day. - <br />Market participants submit bids indicating the quantity of electricity they are willing to buy or sell at various price levels. - <br />Based on these bids, the market operator determines the optimal schedule for electricity generation and consumption to meet forecasted demand while minimizing costs. - <br />The day-ahead market clears once a day, typically in the evening, and establishes the prices and quantities of electricity for the following day.<br />
#Merit Order System - The merit order system is used to dispatch power plants based on their marginal costs of generation. - Power plants are ranked in ascending order of their marginal costs, with renewable energy sources like wind and solar typically having the lowest marginal costs (since their fuel is free), followed by nuclear, coal, gas, and finally, peaking plants. - The system dispatches power plants in order of increasing marginal costs until the forecasted demand is met. - The clearing price in the day-ahead market is often determined by the marginal cost of the last unit of electricity needed to meet demand, which is typically set by a gas-fired or coal-fired power plant. - As a result, renewable energy sources are typically dispatched first when their output is available, helping to reduce the overall cost of electricity generation and promote the integration of renewable energy into the grid.