Promoting the market and system integration of renewable energies through premium schemes—A case study of the German market premium

Gawel, Erik; Purkus, Alexandra

doi:10.1016/j.enpol.2013.06.117

Cited by 83 publications

(39 citation statements)

References 20 publications

(45 reference statements)

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“…The market premium pays for the difference between a set reference price and the average market value of the electricity generated, calculated on a monthly ex-post basis. Plant operators which sell electricity primarily when market prices are high can generate revenues above the average market values used in the premium's calculation, resulting in incentives for demand-oriented production [27,68]. However, the strength of these incentives depends on the spread between base and peak hour prices on EPEX spot markets (i.e.…”

Section: Policy Incentives For Flexible Power Generation From Biomassmentioning

confidence: 99%

“…However, if the rationale for supporting bioelectricity as a comparatively costly RES technology is based on its option value as a flexibility option, specific flexibility requirements are necessary to incentivise the development and use of technological and organisational innovations needed for flexibility provision. In part, this necessity for specific flexibility rules derives from the structure of market premium incentives-receiving the market premium is tied to actual feed-in, so that in absence of the requirement of having a PQ of at least 2, bioelectricity producers have an incentive to feed-in electricity even in times of low electricity prices, as long as the sum of electricity price and expected market premium is above marginal production costs [68]. As a potential alternative to production-based support, a capacity-based premium distorts market signals less [104]; however, it may bring about new distortions in investment decisions, by incentivising a maximisation of capacity without regard for "optimal" PQ value.…”

Section: Implications For the Remuneration Of Flexible Bioelectricitymentioning

confidence: 99%

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Contributions of flexible power generation from biomass to a secure and cost-effective electricity supply—a review of potentials, incentives and obstacles in Germany

et al. 2018

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Background: With wind power and photovoltaics, volatile renewables have emerged as central pillars of the energy transition. This increases the demand for flexibility options to compensate fluctuations in power generation. Focussing on the role of bioenergy as a renewable flexibility option, this article seeks to address two questions. The first is whether there is an option value of bioenergy as a provider of low-carbon flexibility in a future power system, which might justify continued technology-specific deployment support. The second question is whether existing market and policy incentives are effective in activating flexibility potentials, and what perspectives exist for increasing flexibility incentives. Methods: The article follows an interdisciplinary approach. First, technical potentials for flexible bioenergy plants and potential systemic contributions are examined. This is followed by an economic assessment of what flexibility incentives are provided by relevant market and policy framework conditions. Findings: Power from biomass can be well suited to provide flexible generation for grid stabilisation and residual load balancing. Biogas plants require an increase of nominal power over rated power, whereas the technical flexibilisation potential of solid biomass plants depends on specific technologies. Particularly, small-scale combined heat and power systems can deliver fast responses. For existing biogas plants, the Renewable Energy Sources Act's (EEG) flexibility premium and balancing market revenues have incentivised some changes in the production behaviour and investments in plant flexibilisation. However, decreasing spot market price levels and decreasing price variance reduce incentive strength. This also limits flexibilisation incentives for solid biomass plants. For new biogas plants, the EEG's remuneration rules set effective flexibility incentives, but 2014 reductions in remuneration rates have significantly slowed down the expansion. Conclusions: Given high technical potentials for flexibility provision, there is an option value of keeping bioelectricity in the technology mix until more is known about its future competitiveness with other low-carbon flexibility options. To maintain this option value, there is a case for setting policy incentives in a way that continued technological development remains possible. A stringent climate policy could accelerate structural change in the electricity sector, to allow for market price signals which incentivise low-carbon flexibility provision.

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Section: Policy Incentives For Flexible Power Generation From Biomassmentioning

confidence: 99%

Section: Implications For the Remuneration Of Flexible Bioelectricitymentioning

confidence: 99%

Contributions of flexible power generation from biomass to a secure and cost-effective electricity supply—a review of potentials, incentives and obstacles in Germany

et al. 2018

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“…Compared to a feed-in tariff system, the FiP creates an incentive to produce electricity when it is needed most (Hiroux and Saguan, 2010;Gawel and Purkus, 2013) because the plant owner total remuneration will rise with increasing electricity prices. Everything else being equal, investors will favor projects which deliver electricity when prices are high, hence facilitating the integration of intermittent renewable energy into the electricity system (Langniss et al, 2009).…”

Section: Feed-in Premiummentioning

confidence: 99%

“…Despite a recent fall in the cost of wind and particularly of solar power, intermittent renewable energy technologies are not competitive at current market prices (Gawel and Purkus, 2013) and few intermittent power projects would be realized without some type of support.…”

Section: Introductionmentioning

confidence: 99%

Rethinking How to Support Intermittent Renewables

Narbel

2014

SSRN Journal

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Intermittent renewable energy sources, including solar and wind power, typically remain more expensive than conventional power sources. As a consequence, few intermittent power projects would have been deployed if specific policy instruments had not been implemented.Existing policy instruments facilitating the deployment of intermittent renewable energy technologies include the feed-in tariff, the feed-in premium and the quota system. Based on a numerical analysis, it is shown that these specific policy instruments do not necessarily facilitate the deployment of valuable energy sources because they ignore the cost of intermittency. A valuable intermittent energy source is defined here as a source of energy which requires little financial support and which limits the need for capacity payments in order to ensure the security of supply. Based on insights from the numerical analysis, a new policy instrument is suggested: a multiplicative premium. This type of policy instrument would increase the likelihood that valuable intermittent energy assets are deployed in priority.

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“…Um Anreize für einen Wechsel zu setzen, müssen Produzenten jedoch für Risiken wie den Ausgleich von Prognosefehlern und Vermarktungskosten kompensiert werden (Fraunhofer-ISI et al 2011). Den hieraus resultierenden, zusätzlichen Förderkosten steht der systemische Nutzen einer bedarfsorientierten Einspeisung entgegen, wenn sich die durch das Prämienmodell gesetzten Anreize als effektiv erweisen (Gawel und Purkus 2013a, 2013b …”

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Förderung der Markt- und Systemintegration erneuerbarer Energien – Perspektiven einer instrumentellen Weiterentwicklung

Gawel¹,

Purkus²,

Korte³

et al. 2013

VJH

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Promoting the market and system integration of renewable energies through premium schemes—A case study of the German market premium

Cited by 83 publications

References 20 publications

Contributions of flexible power generation from biomass to a secure and cost-effective electricity supply—a review of potentials, incentives and obstacles in Germany

Contributions of flexible power generation from biomass to a secure and cost-effective electricity supply—a review of potentials, incentives and obstacles in Germany

Rethinking How to Support Intermittent Renewables

Förderung der Markt- und Systemintegration erneuerbarer Energien – Perspektiven einer instrumentellen Weiterentwicklung

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