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The Benefit of Coordinating Congestion Management in Germany

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  • Friedrich Kunz
  • Alexander Zerrahn

Abstract

The management of congestion within the German electricity transmission network has become more important during the last years. This emerging relevance is caused by the increase of renewable generation and the partial phaseout of nuclear power plants. Both developments yield a change in the transmission flow pattern and thus the need for congestion management. Currently, four German transmission system operators (TSOs) are in charge of managing congestion using curative methods, particularly re-dispatch of power plants. However, the existence of four TSOs within Germany induces the question whether coordination between them in managing national congestion would be beneficial. To address this issue, we apply a generalized Nash equilibrium model to analyze different degrees of coordination, covering the German electricity market with a detailed representation of the generation and network structure. Our results indicate that the costs of congestion management decrease in a rising degree of coordination as TSOs take into account congestion in other operators' zones. Total costs are highest in case each TSO is solely responsible for its own zone, and lowest if one integrated entity is in charge of mitigating congestion. We conclude that, in a setup with multiple TSOs, inducing coordination, for instance through a common market, has the potential of lowering the overall costs of congestion management.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.421155.de/dp1298.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 1298.

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Length: 27 p.
Date of creation: 2013
Date of revision:
Handle: RePEc:diw:diwwpp:dp1298

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Related research

Keywords: Congestion Management; Coordination; Electricity Economics; Generalized Nash Equilibrium; Germany;

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References

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  1. Neuhoff, Karsten & Barquin, Julian & Bialek, Janusz W. & Boyd, Rodney & Dent, Chris J. & Echavarren, Francisco & Grau, Thilo & von Hirschhausen, Christian & Hobbs, Benjamin F. & Kunz, Friedrich & Nabe, 2013. "Renewable electric energy integration: Quantifying the value of design of markets for international transmission capacity," Energy Economics, Elsevier, vol. 40(C), pages 760-772.
  2. Florian Leuthold & Hannes Weigt & Christian Hirschhausen, 2012. "A Large-Scale Spatial Optimization Model of the European Electricity Market," Networks and Spatial Economics, Springer, vol. 12(1), pages 75-107, March.
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Cited by:
  1. Katrin Trepper & Michael Bucksteeg & Christoph Weber, 2013. "An integrated approach to model redispatch and to assess potential benefits from market splitting in Germany," EWL Working Papers 1319, University of Duisburg-Essen, Chair for Management Science and Energy Economics, revised Apr 2014.

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