  This paper proposes an agent-based model that combines both spot and
balancing electricity markets. From this model, we develop a multi-agent
simulation to study the integration of the consumers' flexibility into the
system. Our study identifies the conditions that real-time prices may lead to
higher electricity costs, which in turn contradicts the usual claim that such a
pricing scheme reduces cost. We show that such undesirable behavior is in fact
systemic. Due to the existing structure of the wholesale market, the predicted
demand that is used in the formation of the price is never realized since the
flexible users will change their demand according to such established price. As
the demand is never correctly predicted, the volume traded through the
balancing markets increases, leading to higher overall costs. In this case, the
system can sustain, and even benefit from, a small number of flexible users,
but this solution can never upscale without increasing the total costs. To
avoid this problem, we implement the so-called "exclusive groups." Our results
illustrate the importance of rethinking the current practices so that
flexibility can be successfully integrated considering scenarios with and
without intermittent renewable sources.
