IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v62y2017icp125-138.html
   My bibliography  Save this article

Economic assessment of virtual power plants in the German energy market — A scenario-based and model-supported analysis

Author

Listed:
  • Loßner, Martin
  • Böttger, Diana
  • Bruckner, Thomas

Abstract

The energy transition (“Energiewende”) in Germany will result in a substantial transformation of the energy supply system. Virtual power plants are expected to be important components of the new intelligent energy infrastructure. They aggregate beside different types of distributed generation units also active consumers and storage technologies in order to integrate these in a profit-maximising, system-stabilising, and sustainable way. The assessment of the economic performance of virtual power plants requires a scenario-based and model-supported analysis. In this relation, future energy market conditions are simulated using the scenario methodology. Starting from the year 2015, three scenarios have been identified that illustrate alternative energy developments in Germany by 2030. Based on these scenarios, the additional revenues potential of the modeled virtual power plant is identified when compared to an independent and non-market-oriented operation mode of distributed energy resources. According to the model results, revenues of the VPP can increase by 11% up to 30% in the analyzed scenarios in 2030 due to the market-oriented operation mode. Nevertheless, the amount and composition vary depending on technology-specific subsidies, temporary nature of power demand and price structures in the energy market. Fluctuating renewable energies are expected to benefit from the market-oriented operation mode in the virtual power plant, especially through the EEG direct marketing. The selective and regulated shutdown of renewable energies in times of negative electricity prices may lead to further cost savings. The utilization of temporary price fluctuations in the spot market and the demand-oriented provision of control power offer high additional revenue potential for flexible controllable technologies such as battery storage, biomethane as well as combined heat and power units. Finally, the determination of the long-term profitability of a virtual power plant still requires a full-scale cost–benefit analysis. For this holistic approach, the model results provide a reliable scientific basis.

Suggested Citation

  • Loßner, Martin & Böttger, Diana & Bruckner, Thomas, 2017. "Economic assessment of virtual power plants in the German energy market — A scenario-based and model-supported analysis," Energy Economics, Elsevier, vol. 62(C), pages 125-138.
    • Handle: RePEc:eee:eneeco:v:62:y:2017:i:c:p:125-138
    DOI: 10.1016/j.eneco.2016.12.008
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988316303541
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2016.12.008?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Pedro Faria & Zita Vale & José Baptista, 2015. "Demand Response Programs Design and Use Considering Intensive Penetration of Distributed Generation," Energies, MDPI, vol. 8(6), pages 1-17, June.
    2. Viebahn, Peter & Soukup, Ole & Samadi, Sascha & Teubler, Jens & Wiesen, Klaus & Ritthoff, Michael, 2015. "Assessing the need for critical minerals to shift the German energy system towards a high proportion of renewables," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 655-671.
    3. Hirth, Lion & Ziegenhagen, Inka, 2015. "Balancing power and variable renewables: Three links," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 1035-1051.
    4. Rosario Miceli, 2013. "Energy Management and Smart Grids," Energies, MDPI, vol. 6(4), pages 1-29, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Behnaz Behi & Ali Baniasadi & Ali Arefi & Arian Gorjy & Philip Jennings & Almantas Pivrikas, 2020. "Cost–Benefit Analysis of a Virtual Power Plant Including Solar PV, Flow Battery, Heat Pump, and Demand Management: A Western Australian Case Study," Energies, MDPI, vol. 13(10), pages 1-24, May.
    2. Natalia Naval & Jose M. Yusta, 2020. "Water-Energy Management for Demand Charges and Energy Cost Optimization of a Pumping Stations System under a Renewable Virtual Power Plant Model," Energies, MDPI, vol. 13(11), pages 1-21, June.
    3. Behnaz Behi & Ali Arefi & Philip Jennings & Arian Gorjy & Almantas Pivrikas, 2021. "Advanced Monitoring and Control System for Virtual Power Plants for Enabling Customer Engagement and Market Participation," Energies, MDPI, vol. 14(4), pages 1-19, February.
    4. Pavel Atănăsoae, 2018. "The Operating Strategies of Small-Scale Combined Heat and Power Plants in Liberalized Power Markets," Energies, MDPI, vol. 11(11), pages 1-16, November.
    5. Tser-Yieth Chen & Chi-Jui Huang, 2019. "A Two-Tier Scenario Planning Model of Environmental Sustainability Policy in Taiwan," Sustainability, MDPI, vol. 11(8), pages 1-21, April.
    6. Naval, Natalia & Sánchez, Raul & Yusta, Jose M., 2020. "A virtual power plant optimal dispatch model with large and small-scale distributed renewable generation," Renewable Energy, Elsevier, vol. 151(C), pages 57-69.
    7. Khalil Gholami & Behnaz Behi & Ali Arefi & Philip Jennings, 2022. "Grid-Forming Virtual Power Plants: Concepts, Technologies and Advantages," Energies, MDPI, vol. 15(23), pages 1-26, November.
    8. Sara Bellocchi & Michele Manno & Michel Noussan & Michela Vellini, 2019. "Impact of Grid-Scale Electricity Storage and Electric Vehicles on Renewable Energy Penetration: A Case Study for Italy," Energies, MDPI, vol. 12(7), pages 1-32, April.
    9. Tomasz Sikorski & Michał Jasiński & Edyta Ropuszyńska-Surma & Magdalena Węglarz & Dominika Kaczorowska & Paweł Kostyła & Zbigniew Leonowicz & Robert Lis & Jacek Rezmer & Wilhelm Rojewski & Marian Sobi, 2019. "A Case Study on Distributed Energy Resources and Energy-Storage Systems in a Virtual Power Plant Concept: Economic Aspects," Energies, MDPI, vol. 12(23), pages 1-21, November.
    10. Marta Bottero & Federico Dell’Anna & Vito Morgese, 2021. "Evaluating the Transition Towards Post-Carbon Cities: A Literature Review," Sustainability, MDPI, vol. 13(2), pages 1-28, January.
    11. Ecker, Franz & Spada, Hans & Hahnel, Ulf J.J., 2018. "Independence without control: Autarky outperforms autonomy benefits in the adoption of private energy storage systems," Energy Policy, Elsevier, vol. 122(C), pages 214-228.
    12. Amit Kumer Podder & Sayemul Islam & Nallapaneni Manoj Kumar & Aneesh A. Chand & Pulivarthi Nageswara Rao & Kushal A. Prasad & T. Logeswaran & Kabir A. Mamun, 2020. "Systematic Categorization of Optimization Strategies for Virtual Power Plants," Energies, MDPI, vol. 13(23), pages 1-46, November.
    13. Schwidtal, Jan Marc & Agostini, Marco & Coppo, Massimiliano & Bignucolo, Fabio & Lorenzoni, Arturo, 2023. "Optimized operation of distributed energy resources: The opportunities of value stacking for Power-to-Gas aggregated with PV," Applied Energy, Elsevier, vol. 334(C).
    14. Dodiek Ika Candra & Kilian Hartmann & Michael Nelles, 2018. "Economic Optimal Implementation of Virtual Power Plants in the German Power Market," Energies, MDPI, vol. 11(9), pages 1-24, September.
    15. Yu, Songyuan & Fang, Fang & Liu, Yajuan & Liu, Jizhen, 2019. "Uncertainties of virtual power plant: Problems and countermeasures," Applied Energy, Elsevier, vol. 239(C), pages 454-470.
    16. Yetuo Tan & Yongming Zhi & Zhengbin Luo & Honggang Fan & Jun Wan & Tao Zhang, 2023. "Optimal Scheduling of Virtual Power Plant with Flexibility Margin Considering Demand Response and Uncertainties," Energies, MDPI, vol. 16(15), pages 1-14, August.
    17. Wang, Han & Riaz, Shariq & Mancarella, Pierluigi, 2020. "Integrated techno-economic modeling, flexibility analysis, and business case assessment of an urban virtual power plant with multi-market co-optimization," Applied Energy, Elsevier, vol. 259(C).
    18. Srđan Skok & Ahmed Mutapčić & Renata Rubesa & Mario Bazina, 2020. "Transmission Power System Modeling by Using Aggregated Distributed Generation Model Based on a TSO—DSO Data Exchange Scheme," Energies, MDPI, vol. 13(15), pages 1-15, August.
    19. Pavel Atănăsoae, 2022. "Allocation of Joint Costs and Price Setting for Electricity and Heat Generated in Cogeneration," Energies, MDPI, vol. 16(1), pages 1-20, December.
    20. Michal Jasiński & Tomasz Sikorski & Dominika Kaczorowska & Jacek Rezmer & Vishnu Suresh & Zbigniew Leonowicz & Paweł Kostyla & Jarosław Szymańda & Przemysław Janik, 2020. "A Case Study on Power Quality in a Virtual Power Plant: Long Term Assessment and Global Index Application," Energies, MDPI, vol. 13(24), pages 1-20, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ren, Kaipeng & Tang, Xu & Wang, Peng & Willerström, Jakob & Höök, Mikael, 2021. "Bridging energy and metal sustainability: Insights from China’s wind power development up to 2050," Energy, Elsevier, vol. 227(C).
    2. Eicke, Anselm & Ruhnau, Oliver & Hirth, Lion, 2021. "Electricity balancing as a market equilibrium," EconStor Preprints 233852, ZBW - Leibniz Information Centre for Economics.
    3. Nitsch, Felix & Deissenroth-Uhrig, Marc & Schimeczek, Christoph & Bertsch, Valentin, 2021. "Economic evaluation of battery storage systems bidding on day-ahead and automatic frequency restoration reserves markets," Applied Energy, Elsevier, vol. 298(C).
    4. Hugo Algarvio & Fernando Lopes & António Couto & Ana Estanqueiro, 2019. "Participation of wind power producers in day‐ahead and balancing markets: An overview and a simulation‐based study," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 8(5), September.
    5. Hache, Emmanuel & Seck, Gondia Sokhna & Simoen, Marine & Bonnet, Clément & Carcanague, Samuel, 2019. "Critical raw materials and transportation sector electrification: A detailed bottom-up analysis in world transport," Applied Energy, Elsevier, vol. 240(C), pages 6-25.
    6. Batalla-Bejerano, Joan & Costa-Campi, Maria Teresa & Trujillo-Baute, Elisa, 2016. "Collateral effects of liberalisation: Metering, losses, load profiles and cost settlement in Spain’s electricity system," Energy Policy, Elsevier, vol. 94(C), pages 421-431.
    7. Casimir Lorenz & Clemens Gerbaulet, 2017. "Wind Providing Balancing Reserves: An Application to the German Electricity System of 2025," Discussion Papers of DIW Berlin 1655, DIW Berlin, German Institute for Economic Research.
    8. Liang, Yanan & Kleijn, René & Tukker, Arnold & van der Voet, Ester, 2022. "Material requirements for low-carbon energy technologies: A quantitative review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 161(C).
    9. Schillinger, Moritz, 2019. "Balancing Market Design and Opportunity Cost - The Swiss Case," Working papers 2019/14, Faculty of Business and Economics - University of Basel.
    10. Boldrini, A. & Jiménez Navarro, J.P. & Crijns-Graus, W.H.J. & van den Broek, M.A., 2022. "The role of district heating systems to provide balancing services in the European Union," Renewable and Sustainable Energy Reviews, Elsevier, vol. 154(C).
    11. Raul-Alexandru Szakal & Alexandru Doman & Sebastian Muntean, 2021. "Influence of the Reshaped Elbow on the Unsteady Pressure Field in a Simplified Geometry of the Draft Tube," Energies, MDPI, vol. 14(5), pages 1-21, March.
    12. Angelica, Gianfreda & Lucia, Parisio & Matteo, Pelagatti, 2017. "The RES-induced Switching Effect Across Fossil Fuels: An Analysis of the Italian Day-Ahead and Balancing Prices and Their Connected Costs," Working Papers 360, University of Milano-Bicocca, Department of Economics, revised 03 Feb 2017.
    13. Tobias Junne & Sonja Simon & Jens Buchgeister & Maximilian Saiger & Manuel Baumann & Martina Haase & Christina Wulf & Tobias Naegler, 2020. "Environmental Sustainability Assessment of Multi-Sectoral Energy Transformation Pathways: Methodological Approach and Case Study for Germany," Sustainability, MDPI, vol. 12(19), pages 1-28, October.
    14. Di Cosmo, Valeria & Malaguzzi Valeri, Laura, 2018. "Wind, storage, interconnection and the cost of electricity generation," Energy Economics, Elsevier, vol. 69(C), pages 1-18.
    15. Joao C. Ferreira & Ana Lucia Martins, 2018. "Building a Community of Users for Open Market Energy," Energies, MDPI, vol. 11(9), pages 1-21, September.
    16. Handriyanti Diah Puspitarini & Baptiste François & Marco Baratieri & Casey Brown & Mattia Zaramella & Marco Borga, 2020. "Complementarity between Combined Heat and Power Systems, Solar PV and Hydropower at a District Level: Sensitivity to Climate Characteristics along an Alpine Transect," Energies, MDPI, vol. 13(16), pages 1-19, August.
    17. Lobato, E. & Doenges, K. & Egido, I. & Sigrist, L., 2020. "Limits to wind aggregation: Empirical assessment in the Spanish electricity system," Renewable Energy, Elsevier, vol. 147(P1), pages 1321-1330.
    18. Papaefthymiou, Georgios & Haesen, Edwin & Sach, Thobias, 2018. "Power System Flexibility Tracker: Indicators to track flexibility progress towards high-RES systems," Renewable Energy, Elsevier, vol. 127(C), pages 1026-1035.
    19. Qingwu Gong & Jiazhi Lei & Jun Ye, 2016. "Optimal Siting and Sizing of Distributed Generators in Distribution Systems Considering Cost of Operation Risk," Energies, MDPI, vol. 9(1), pages 1-18, January.
    20. De Vos, K. & Stevens, N. & Devolder, O. & Papavasiliou, A. & Hebb, B. & Matthys-Donnadieu, J., 2019. "Dynamic dimensioning approach for operating reserves: Proof of concept in Belgium," Energy Policy, Elsevier, vol. 124(C), pages 272-285.

    More about this item

    Keywords

    Virtual power plant; Economic analysis; Scenario analysis; Electricity market; Renewable energy systems; Combined heat and power;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:62:y:2017:i:c:p:125-138. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.