Fraunhofer-Institut für System- und Innovationsforschung ISI

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Impact of sector coupling on the market value of renewable energies - a model-based scenario analysis

2021 , Bernath, Christiane , Deac, Gerda , Sensfuß, Frank

Decarbonizing the energy supply by substituting fossil fuels with renewable energy sources (RES) is a key task for the coming decades in order to achieve the EU's ambitious climate protection targets. Information about the possible development and marketability of RES in the electricity sector is essential for assessing future funding needs. However, rising shares of fluctuating RES generation in the energy system reduce the average market prices and increase price volatility. Balancing price variations requires a considerable degree of flexibility. Additional flexibility in the electricity market through closer interconnection between the electricity sector and other demand sectors makes it possible to keep the market values of RES closer to the general market price level, irrespective of their shares. Such sector coupling can thus contribute to a cost-efficient transition to a low-carbon energy system. This paper examines the impact of efficient sector coupling on the market values of RES in a European energy system with ambitious decarbonization. We analyze different scenarios by applying the Enertile model, which uses an integrated cost optimization approach with flexibility options due to sector coupling and provides a detailed future development of RES. In our analysis, we examine three flexibility options: smart charging of electric vehicles, decentralized heat pumps in buildings, and multivalent district heating grids. We show that the flexible use of electricity in district heating has a significant impact on market values, while the impact of both flexible electric vehicle charging and flexible heating with heat pumps is rather small. Short-term flexibility due to load shifting of the charging or heating process shows only a limited effect on market values. Fuel switching in district heating, however, offers the possibility to change the absolute demand for electricity in direct response to RES feed-in and drastically reduces the curtailment of RES.

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Market integration of renewable electricity generation - the german market premium model

2013 , Klobasa, Marian , Winkler, Jenny , Sensfuss, F. , Ragwitz, Mario

Feed-in tariffs for renewable electricity have proven to be an effective and cost-efficient instrument because they provide long-term investment security; however, they do not incentivize grid and market integration. Feed-in premiums are a relatively novel instrument designed with the objective of keeping investment risks low while allowing for improved grid and market integration. This article analyses the German feed-in premium. The evaluation of the operation during the first year gives first indications that the market premium can contribute to the system and market integration of renewable energies, while still maintaining investment security. First impacts can be seen in the following fields: diversity of market actors, forecast accuracy, improved remote control and participation in the reserve markets. In general, it can be concluded that the German market premium has been able to trigger significant developments. However, additional assessments of the instrument are necessary in order to see whether the observed changes are sustainable and lead to the expected developments.

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Agent-based simulation of electricity markets - a literature review

2007 , Sensfuss, F. , Genoese, M. , Ragwitz, Mario , Möst, D.

Liberalisation, climate policy and promotion of renewable energy are challenges to players of the electricity sector in many countries. Policy makers have to consider issues like market power, bounded rationality of players and the appearance of fluctuating energy sources in order to provide adequate legislation. Furthermore the interactions between markets and environmental policy instruments become an issue of increasing importance. A promising approach for the scientific analysis of these developments is the field of agent-based simulation. The goal of this article is to provide an overview of the current work applying this methodology to the analysis of electricity markets.

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Factors affecting the calculation of wind power potentials: A case study of China

2021 , Franke, Katja , Sensfuß, Frank , Deac, Gerda , Kleinschmitt, Christoph , Ragwitz, Mario

In order to mitigate global climate change and air pollution, the Chinese government has assigned high priority to expanding low-carbon power generation in China. Recent studies have shown that wind power is one of the most promising renewable energy option in China. Although many studies have estimated the generation potential of onshore wind power, their results vary widely from 1783 TWh to 39,000 TWh. Therefore, we examine the different assumptions in these papers and identify three main factors influencing the results. The three influencing factors are: weather data set, land utilisation factor, and wind turbine configuration. For our model-based analysis, we define a reference scenario which is used to compare the results. Our analysis shows using a different weather data set increases the generation potential to roughly 35,000 TWh. This is 54% higher than the generation potential of the reference scenario. The land utilisation factor also has a large influence, ranging between -10% and -51%. The studies' assumptions and data should be subjected to careful scrutiny, as the calculated wind power potentials are widely used to develop decarbonisation strategies for the energy system.

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The merit-order effect: A detailed analysis of the price effect of renewable electricity generation on spot market prices in Germany

2008 , Sensfuss, F. , Ragwitz, Mario , Genoese, M.

The German feed-in support of electricity generation from renewable energy sources has led to high growth rates of the supported technologies. Critics state that the costs for consumers are too high. An important aspect to be considered in the discussion is the price effect created by renewable electricity generation. This paper seeks to analyse the impact of privileged renewable electricity generation on the electricity market in Germany. The central aspect to be analysed is the impact of renewable electricity generation on spot market prices. The results generated by an agent-based simulation platform indicate that the financial volume of the price reduction is considerable. In the short run, this gives rise to a distributional effect which creates savings for the demand side by reducing generator profits. In the case of the year 2006, the volume of the merit-order effect exceeds the volume of the net support payments for renewable electricity generation which have to be paid by consumers.

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How can the renewables targets be reached cost-effectively? Policy options for the development of renewables and the transmission grid

2018 , Held, Anne , Ragwitz, Mario , Sensfuß, Frank , Resch, Gustav , Olmos, Luis , Ramos, Andrés , Rivier, Michel

Increasing the share of renewable energy sources in the electricity sector (RES-E) contributes to achieving the European energy and climate targets including a 27% share of renewables in final energy consumption by 2030. We assess the future costs of the power sector for different RES-target levels and support schemes including generation costs, system operation costs and transmission grid development costs based on three power sector models. The results show similar power system costs for different target levels. RES-E shares below 70% involve limited infrastructure costs that are below 2.6% of the overall system costs. The impacts of the modelled RES-E policies, an EU quota and national feed-in premiums on transmission costs are ambiguous: Contrary to expectations, the costs of transmission network development under quota obligations are lower than under technology-specific feed-in premiums for RES-E penetration levels up to 50%. The drivers of transmission costs include not only a concentration of renewable capacity, but also the exact location of RES-E capacity with respect to existing power plants and the strength of the existing infrastructure. Quota obligations lead to higher grid costs than feed-in premiums if the RES-E share amounts to 70% due to the stronger regional concentration of RES power plants.

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Simulation of current pricing-tendencies in the German electricity market for private consumption

2007 , Müller, M. , Sensfuss, F. , Wietschel, M.

The German electricity market for private consumption is characterized by increasing prices and low participation of the consumers. This prompts us to investigate the interdependencies between the customers' engagement in the market and the suppliers' pricing strategies. Based on an analysis of the German retail market, an agent-based simulation model is developed. Whereas the behaviour of private customers is calibrated on field data, the suppliers learn to maximize profits with a feedback-learning heuristic. The simulation results show a tendency of rising prices, which are created without the assumption of tacit collusion among suppliers. We conclude that in Germany the Current market pressure of private customers may not be a sufficient incentive for suppliers to lower electricity prices.

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