A coordinated strategic reserve to safeguard the European energy transition

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: In Germany and beyond, various capacity mechanisms are currently being discussed with a view to improving the security of electricity supply. One of these mechanisms is a strategic reserve that retains generation capacity for use in times of critical supply shortage. We argue that strategic reserves have specific advantages compared to other capacity mechanisms in the context of the European energy transition. To date, however, the debate on capacity mechanisms has largely been restricted to national contexts. Against this background, we discuss the feasibility and potential benefits of coordinated cross-border strategic reserves to safeguard electricity supply and aid the energy transition in Germany and neighboring countries at large. Setting aside strategic reserve capacity which is deployed only in the event of extreme supply shortages could improve the security of electricity supply without distorting the EU's internal electricity market. In addition, overall costs may decrease when reserve procurement and activation are coordinated among countries, particularly if combined with flow-based market coupling. JEL: D47, L51, Q48 Terms of use: Documents in

Equilibrium supply security in a multinational electricity market with renewable production

“…Typical mechanisms address the problem of blackouts by requiring that available production capacity has a su¢ cient reserve margin to prevent the loss of load probability from exceeding some target level. 4 They limit consumer price exposure by establishing trigger levels in the spot market above which capacity reserves are activated; see Neuho¤ et al (2016) for a characterization of common mechanisms. 5;6 1 See, for instance, the EU Renewables Directive (2009/28/EC) for a formulation of such objectives.…”

“…See Wolak (2003) for diagnosis of the famous California electricity crisis. Producers carry the spot price risk under the system of reliability options, unless they themselves manage to hedge this risk Neuho¤ et al (2016). discuss the distribution of risks associated with reliability options.…”

Hydrothermal Carbonization (HTC) of Green Waste: An Environmental and Economic Assessment of HTC Coal in the Metropolitan Region of Berlin, Germany

“…Schill 2014). In contrast, biomass has the advantage of being dispatchable (Neuhoff et al 2016). Thus, it can contribute to reduced powerstorage requirements and system costs in a renewables-dominated electricity-generation system (Schill and Zerrahn 2017).…”

“…In the power sector, for example, Germany has the objective to raise the share of renewable energy sources in gross electricity consumption to 40-45% by 2025, 55-60% by 2035, and at least 80% by 2050 ( § 1 EEG 2017 as published in Bundesgesetzblatt 2016). 4 However, Germany largely relies on fluctuating renewables, especially wind and photovoltaics (Neuhoff et al 2016). 5 In order to deal with the fluctuations in supply and the weak correlation between supply and hourly load profiles, the integration of wind and photovoltaics into the power system requires numerous adaptation measures, including energy storage, demand management, network expansion, and flexible thermal back-up plants (cf.…”

Capacity Market Implementation in Poland: Analysis of a Survey on Consequences for the Electricity Market and for Energy Management

“…Germany has been using various power mechanisms for many years, supporting the maintenance of reserves at a responsible level and balancing supply and demand in conditions of unstable expansion of renewable energy [42,43]. For this purpose, a strategic reserve and a network reserve [44] are maintained. They are intended to provide revenues to conventional power plants, ready to supply electricity during periods of shortages in RES generation, e.g., on windless or cloudy days [45].…”