Abstract
Large-scale integration of renewable energy sources in today's European hydro-thermal dominated power system will challenge its future operation. In Northern Europe wind power production is expected to contribute the main share to renewable energy sources. Wind forecasting and its inherent forecast error lead to increasing system imbalances. This will require higher production flexibility and more regulating reserves in the system, to ensure its secure and efficient operation. A model of the Northern European power market, including a 2010 and a 2020 scenario, is used to assess the impact of the wind forecast error and the level of reserves, which are required in the system. The analyses show an enormous increase of system imbalances up to 2020 and thus socio-economic costs, which occur in the regulating power market. Rather low requirement level turn out to be most cost effective. However, in 2010 as well as 2020 highest savings can be achieved by the integration of national regulating power markets, concurrently leading to an increased system security.