Electricity Market Design 2030-2050: Moving Towards Implementation

Report (2021)

Climate change and ambitious emission-reduction targets call for an extensive decarbonization of electricity systems, with increasing levels of Renewable Energy Sources (RES) and demand flexibility to ... [more ▼]

Climate change and ambitious emission-reduction targets call for an extensive decarbonization of electricity systems, with increasing levels of Renewable Energy Sources (RES) and demand flexibility to balance the variable and intermittent electricity supply. A successful energy transition will lead to an economically and ecologically sustainable future with an affordable, reliable, and carbon-neutral supply of electricity. In order to achieve these objectives, a consistent and enabling market design is required. The Kopernikus Project SynErgie investigates how demand flexibility of the German industry can be leveraged and how a future-proof electricity market design should be organized, with more than 80 project partners from academia, industry, governmental and non-governmental organizations, energy suppliers, and network operators. In our SynErgie Whitepaper Electricity Spot Market Design 2030-2050 [1], we argued for a transition towards Locational Marginal Prices (LMPs) (aka. nodal prices) in Germany in a single step as a core element of a sustainable German energy policy. We motivated a well-designed transition towards LMPs, discussed various challenges, and provided a new perspective on electricity market design in terms of technological opportunities, bid languages, and strategic implications. This second SynErgie Whitepaper Electricity Market Design 2030-2050: Moving Towards Implementation aims at further concretizing the future German market design and provides first guidelines for an implementation of LMPs in Germany. Numerical studies –while not being free of abstractions –give evidence that LMPs generate efficient locational price signals and contribute to manage the complex coordination challenge in (long-term) electricity markets, ultimately reducing price differences between nodes. Spot and derivatives markets require adjustments in order to enable an efficient dispatch and price discovery, while maintaining high liquidity and low transaction costs. Moreover, a successful LMP implementation requires an integration into European market coupling and appropriate interfaces for distribution grids as well as sector coupling. Strategic implications with regard to long-term investments need to be considered, along with mechanisms to support RES investments. As a facilitator for an LMP system, digital technologies should be considered jointly with the market design transition under an enabling regulatory framework. Additional policies can address distributional effects of an LMP system and further prevent market power abuse. Overall, we argue for a well-designed electricity spot market with LMPs, composed of various auctions at different time frames, delivering an efficient market clearing, considering grid constraints, co-optimizing ancillary services, and providing locational prices according to a carefully designed pricing scheme. The spot market is tightly integrated with liquid and accessible derivatives markets, embedded into European market coupling mechanisms, and allows for functional interfaces to distribution systems and other energy sectors. Long-term resource adequacy is ensured and existing RES policies transition properly to the new market design. Mechanisms to mitigate market power and distributional effects are in place and the market design leverages the potential of modern information technologies. Arapid expansion of wind andsolar capacity will be needed to decarbonize the integrated energy system but will most likely also increase the scarcity of the infrastructure. Therefore, an efficient use of the resource "grid" will be a key factor of a successful energy transition. The implementation of an LMPs system of prices with finer space and time granularity promises many upsides and can be a cornerstone for a futureproof electricity system, economic competitiveness, and a decarbonized economy and society. Among the upsides, demand response (and other market participants with opportunity costs) can be efficiently and coherently incentivized to address network constraints, a task zonal systems with redispatch fail at. The transition to LMPs requires a thorough consideration of all the details and specifications involved in the new market design. With this whitepaper, we provide relevant perspectives and first practical guidelines for this crucial milestone of the energy transition. [less ▲]

Electricity Spot Market Design 2030-2050

Report (2021)

Driven by the climate conference in Paris in December 2015 countries worldwide are confronted with the question of how to shape their power system and how to establish alternative technologies to reduce ... [more ▼]

Driven by the climate conference in Paris in December 2015 countries worldwide are confronted with the question of how to shape their power system and how to establish alternative technologies to reduce harmful CO2 emissions. The German government plans that even before the year 2050, all electricity generated and consumed in Germany should be greenhouse gas neutral [1]. To successfully integrate renewable energies, a future energy system must be able to handle the intermittent nature of renewable energy sources such as wind and solar. One important means to address such electricity production variability is demand-side flexibility. Here, industry plays a major role in responding to variable electricity supply with adequate flexibility. This is where the Kopernikus project SynErgie comes in with more than 80 project partners from academia, industry, governmental, and non-governmental organizations as well as energy suppliers and network operators. The Kopernikus project SynErgie investigates how to best leverage demand-side flexibility in the German industry. The current electricity market design in Germany is not well suited to deal with increasing levels of re- newable energy, and it does not embrace demand-side flexibility. Almost 6 GW of curtailed power in 2019 provide evidence that changes are needed with respect to the rules governing electricity markets. These rules were designed at a time when electricity generation was concentrated on a few large and dispatchable conventional power plants and demand was considered inelastic. The SynErgie Cluster IV investigates how a future-proof electricity market design should be organized. The corresponding Work Package IV.3.1 more specifically deals with analyzing and designing allocation and pricing rules on electricity spot markets. The resulting design must be well suited to accommodate demand-side flexibility and address the intermittent nature of important renewable energy sources. This whitepaper is the result of a fruitful collaboration among the partners involved in SynErgie Cluster IV which include Germany’s leading research organizations and practitioners in the field. The collaboration led to an expert workshop in October 2020 with participation from a number of international energy market experts such as Mette Bjørndal (NHH), Endre Bjørndal (NHH), Peter Cramton (University of Maryland and University of Cologne), and Raphael Heffron (University of Dundee). The whitepaper details the key recommendations from this workshop. In particular, the whitepaper recommends a move to a locational, marginal price-based system together with new bidding formats allowing to better express flexibility. We argue in favor of a one-step introduction of locational, marginal prices instead of repeatedly splitting existing zones. Frequent zone splitting involves recurring political debates as well as short- and long-run instabilities affecting the basis for financial con- tracts, for example. Importantly, the definition of stable prize zones is very challenging with increasing levels of distributed and renewable energy sources. The recommendation is the outcome of an intense debate about advantages and downsides of different policy alternatives. However, such a transition to locational, marginal prices is not without challenges, and it is a call to arms for the research community, policymak- ers, and practitioners to develop concepts on how to best facilitate the transition and ensure a reliable and efficient electricity market of the future. We’d like to thank all the project partners and are grateful for the financial support from the Federal Ministry of Education and Research as well as the Project Management Jülich. Hans Ulrich Buhl (Cluster Lead) Martin Bichler (Work Package Lead) [less ▲]

Rethinking Short-Term Electricity Market Design : Options for Market Segment Integration

in 14th International Conference on the European Energy Market (2017)

Electricity market design varies across countries throughout Europe. Thereby the provision and remuneration of flexibility always takes place in short-term market segments. Taking into consideration the ... [more ▼]

Electricity market design varies across countries throughout Europe. Thereby the provision and remuneration of flexibility always takes place in short-term market segments. Taking into consideration the fundamental changes of the power system, this paper discusses options for the future short-term market design. We develop a conceptual basis for a possible integration of currently separated short-term market segments. Market segment integration (MSI) is defined as the interaction between and possible combination of market segments, i.e. intraday market (ID), congestion management (CM) and balancing market (BA). The paper especially focusses on two options, namely an integrated BA and CM market and an integrated ID and CM market. For these options we determine the basic design features. We propose a criteria catalogue which allows the evaluation of the market design options. Based on several criteria we discuss possible positive and negative consequences as well as potential solutions. [less ▲]

Spatial control of laser-induced doping profiles in graphene on hexagonal boron nitride

in ACS Applied Materials and Interfaces (2016), 8(14), 9377-9383

Raman spectroscopy as probe of nanometre-scale strain variations in graphene

in Nature Communications (2015), 6

Low B field magneto-phonon resonances in single-layer and bilayer graphene

in Nano Letters (2015), 15(3), 1547--1552

Raman spectroscopy on mechanically exfoliated pristine graphene ribbons

in Physica Status Solidi B. Basic Research (2014), 251(12), 2551--2555