Frequency markets and the problem of predictability

This work develops forecast models of the two markets – spot market and frequency containment normal reserves (FCR-N) market – of three countries – Denmark, Finland, and Norway – to quantify the difference in their predictability. For 2019 – 2021, hourly data in logged form, on FCR-N prices in – €/MWh – and volumes – in MWh, spot market prices – in €/MWh – and gross consumption – in MWh – is used from Energinet's data portal for Denmark, Fingrid's data portal for Finland, and Statnett's data portal for Norway. The forecast allows both inter country – between same markets of different countries – and intra country – between different markets of the same country – comparison. The results show that the FCR-N markets of the Nordic countries are less predictable than their respective spot markets except for the case of Denmark due to its fixed hourly volumes. Moreover, the smoothing curves of FCR-N forecast models differ for each Nordic country despite their similar market requirements. This is in contrast to the Nordic spot markets where the smoothing curves indicate similarity in inter-country market behaviors. The work also compares the revenues of a BESS unit bidding in FCR-N markets of Denmark, Finland, and Norway using the proposed forecast models. The results show a BESS owner can earn higher revenues in Denmark due to its higher availability payments and better predictability of FCR-N market. Considering market predictability differences in addition to their hourly prices is thus vital for BESS units performing multi-market bidding.