Journal article
On the long-term efficiency of market splitting in Germany
Karlsruhe Institute of Technology1
Technische Universität Dresden2
Department of Technology, Management and Economics, Technical University of Denmark3
Sustainability, Department of Technology, Management and Economics, Technical University of Denmark4
Energy Systems Analysis, Sustainability, Department of Technology, Management and Economics, Technical University of Denmark5
In Europe, the ongoing renewable expansion and delays in the planned grid extension have intensified the discussion about an adequate electricity market design. Against this background, we jointly apply an agent-based electricity market model and an optimal power flow model to investigate the long-term impacts of splitting the German market area into two price zones.
Our approach allows capturing long-term investment and short-term market behavior under imperfect information. We find strong impacts of a German market splitting on electricity prices, expansion planning of generators and required congestion management. While the congestion volumes decrease significantly under a market split in the short term, the optimal zonal configuration for 2020 becomes outdated over time due to dynamic effects like grid extension, renewable expansion and new power plant investments.
Policymakers and regulators should therefore regularly re-assess bidding zone configurations. Yet, this stands in contrast to the major objective of price zones to create stable locational investment incentives.
| Language: | English |
|---|---|
| Year: | 2021 |
| Pages: | 111833 |
| ISSN: | 18736777 and 03014215 |
| Types: | Journal article |
| DOI: | 10.1016/j.enpol.2020.111833 |
| ORCIDs: | Keles, Dogan |
Agent-based simulation Electricity market design Model coupling Optimal power flow SDG 7 - Affordable and Clean Energy Zonal pricingCongestion management
