Congestion management in power systems

Electricity markets are increasingly influenced by variable renewable energy such as wind and solar power with a pronounced weather-induced variability and imperfect predictability. As a result, the evaluation of the capacity value of variable renewable energy, i.e. its contribution to security of supply, gains importance. This paper develops a new methodology to endogenously determine the capacity value in large-scale investment and dispatch models for electricity markets. The framework allows to account for balancing effects due to the spatial distribution of generation capacities and interconnectors. The practical applicability of the methodology is shown with an application for wind power in Europe. We find that wind power can substantially contribute to security of supply in a decarbonized European electricity system in 2050, with regional capacity values ranging from 1-40 %. Analyses, which do not account for the temporal and spatial heterogeneity of the contribution of wind power to security of supply therefore lead to inefficient levels of dispatchable backup capacity. Applying a fixed wind power capacity value of 5 % results in an overestimation of firm capacity requirements in Europe by 66 GW in 2050. This translates to additional firm capacity provision costs of 3.8 bn EUR per year in 2050, which represents an increase of 7 %.

Section: Electricity Market Model and Scenario Definitionmentioning

confidence: 99%

Optimal Allocation of Variable Renewable Energy Considering Contributions to Security of Supply

Peter¹,

Wagner²

2021

“…E.g. Neuhoff et al (2013); Bertsch et al (2016); Egerer et al (2015); Trepper et al (2015); Finck et al (2018); Marjanovic et al (2018); Wyrwoll et al (2018) apply more sophisticated models for the assessment of the existing PZC. A higher level of sophistication can be attained by replicating market processes in more detail, increasing the regional scope, improving granularity of data, enhancing the representation of technical constraints or other measures.…”

Section: Introductionmentioning

confidence: 99%

“…For instance, Neuhoff et al (2013); Bertsch et al (2016); Egerer et al (2015) contain detailed representations of the grid. In addition, Bertsch et al (2016) include transmission grid expansion planning. The market model of Trepper et al (2015) contains intertemporal constraints (minimum operation times, minimum downtimes, water reservoir filling levels, etc.)…”

Section: Introductionmentioning

confidence: 99%

Assessing Improved Price Zones in Europe: Flow-Based Market Coupling in Central Western Europe in Focus

Felling¹,

Felten²,

Osinski³

2023

Theoretical papers have identified several sources of inefficiencies of flow-based market coupling (FBMC), the implicit congestion management method used to couple the Central Western European (CWE) electricity markets. These inefficiencies ultimately lead to welfare losses. In this paper, a large-scale model framework is introduced for FBMC assessments, focusing on modeling the capacity allocation and market clearing processes. The present paper completes this framework by presenting a newly developed redispatch model. Furthermore, we provide a case study assessing improved price zone configurations (PZCs) for the CWE electricity system, motivated by the debate on the currently-existing PZC. Our results show that improved PZCs-even while maintaining the number of price zones-can significantly reduce redispatch quantities and overall system costs. Moreover, making use of the insights of (Felten et al., 2021), we explain why increasing the number of price zones may not always increase welfare when using FBMC.

“…We show that the market design is inherently incomplete due to missing price signals, and that important scarcities in the grid are not properly considered for investment decisions. For this, we build on a long-term fundamental model of the European electricity market developed in Bertsch et al (2015), allowing the representation of the European zonal markets with redispatch. The model includes generation dispatch, power flows, as well as generation and grid investments.…”

Section: Introductionmentioning

confidence: 99%

“…The model includes generation dispatch, power flows, as well as generation and grid investments. In contrast to Bertsch et al (2015), we implement the EU 2030 energy strategy to ensure the results are in line with current European policies. Furthermore, we extend the analysis by designing six scenarios that differ with respect to their level of allowed grid expansion.…”

Section: Introductionmentioning

confidence: 99%

The Relevance of Grid Expansion under Zonal Markets

Bertsch¹,

Brown²,

Hagspiel³

et al. 2017

Self Cite

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. Terms of use: Documents in AbstractThe European electricity market design is based on zonal markets with uniform prices. Locational price signals within these zones -necessary to ensure long-term efficiency -are not provided.Specifically, if intra-zonal congestion occurs due to missing grid expansion, the market design is revealed as inherently incomplete. This might lead to severe, unwanted distortions of the electricity market, both in the short-and in the long-term. In this paper, we study these distortions with a specific focus on the impact of restricted grid expansion under zonal markets. For this, we use a long term fundamental dispatch and investment model of the European electricity system and gradually restrict the allowed expansion of the transmission grid per decade. We find that the combination of an incomplete market design and restricted grid expansion leads to a misallocation of generation capacities and the inability to transport electricity to where it is needed. Consequences are severe and lead to load curtailment of up to 2-3 %. Moreover, missing grid expansion makes it difficult and costly to reach envisaged energy targets in the power sector. Hence, we argue that in the likely event of restricted grid expansion, either administrative measures or -presumably more efficient -an adaptation of the current market design to include locational signals will become necessary.JEL classification: D47, C61, C63, Q40