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During the 20th century, most countries had their electricity production, transport and distribution organised as vertically integrated monopoly. Since the 90s more and more countries, especially in Europe, have replaced their state monopoly by an open market to manage their electrical power system. In order to settle a deregulated market of electricity, countries must adopt new methods and rules for trading electricity, planning production and managing the balance between electricity production and consumption of national power systems. In this context new tools are needed, such as software tools and information systems. This master thesis is part of an R&D project, aiming at developing software tools for the implementation of electricity markets, especially the mechanisms of bidding to buy and sell electricity on the Balancing Market. The new software developed by this R&D project is a generic software, based on a flexible model, and it should be adapted to different systems of electricity markets. The present master thesis report explains the principles and processes of electricity markets, focusing on the auction mechanisms for the purchase of electricity in real time: the Balancing Market. The report exposes different methods to regulate the stability of electricity network in different European countries (Regulation Services to maintain the balance between electricity production and consumption), and analyses different systems of Balancing Market in various countries; more specifically, it inludes syntheses of the balancing market systems in Romania, Hungary, Germany, France and the Nordic countries. From the confrontation of those systems, the basis for a new flexible model has been developed. This report aims to be useful for people who have to work on a project related to electricity market (especially this R&D project) and need to acquire the required knowledge about markets of electricity, regulation services and balancing markets (especially the market systems of Romania, Hungary, Germany, France and the Nordic countries).

As global investments in renewable energy technologies continue to grow, their effects on electricity markets are a challenge for regulators and policymakers. The thesis examines the effects of forecast errors of Czech and German renew- able energy sources on the size and volatility of the system imbalance of the Czech balancing market. Using a quantile regression and ARFIMA-GARCH models on hourly data, I found that higher solar and wind forecast errors in- crease the system imbalance in absolute terms and affect the volatility. The results show that the Czech solar and wind forecast errors have significantly higher effect than the German forecast errors on the size and volatility of the system imbalance. The strongest effect on the size and volatility of the system imbalance have the Czech solar forecast errors. Therefore, the Czech govern- ment should insist on improving the accuracy and availability of renewable energy forecasts from the transmission system operator ČEPS. Klasifikace JEL C14, C50, Q42 Klíčová slova renewable sources, forecast errors, balanc- ing market, system imbalance

With the increase in energy demand, and therefore, in energy generation, new high voltage direct current export links and overseas connections of large amounts of power are being introduced. These new links are subject to possible malfunction or failures, which may causea substantial frequency increase in the power system. The need of restorative measurements for over-frequencies is then necessary to regulate this probable imbalance. A new ancillary market product for frequency down-regulation is then being introduced. The Frequency Containment Reserves – Disturbances for downregulation is a service used to handle overfrequencies in the power system. The ancillary market has been historically dominated by hydro, however, with the local plans that set goals to reach 100 % renewable electricity production by the year 2040, ineluctably solar and wind will be occupying a large share of the energy generation, thus the amount of renewable resources to provide ancillary services will increase as well. Nevertheless, requirements to participate in the ancillary market are strict, and renewables face challenges such as unpredictable power generation, making forecasting tools essential for their participation. In this thesis, through the literature and research of an emerging field, the synthetic solar irradiance, an algorithm with adjusted parameters is replicated with the objective of downscaling solar irradiance presumptive-forecasts from 15-minute intervals to 1-minute intervals. An updated clear-sky model, and weather categorization method is used as input to improve the results of the synthesis. A year evaluation with a method to detect irradiance dips is used to evaluate the algorithm. The result of this study contributes with positive outputs. The introduction of this secondary tool to estimate higher resolution irradiance variability data proves to obtain, at 57 % of the point-to-point critical cases examination, an over-estimation of the measured irradiance. This, in turn, grants the actors that participate with solar power the option to adjust the bidding strategy process in the ancillary market accordingly to the output of this tool.