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Market design of regional flexibility markets: A classification metric for flexibility products and its application to German prototypical flexibility markets

Author

Listed:
  • Erik Heilmann

    (University of Kassel)

  • Nikolai Klempp

    (University of Stuttgart)

  • Heike Wetzel

    (University of Kassel)

Abstract

With a growing number of distributed energy resources, the electricity network is challenged with a higher quantity of technical problems such as capacity congestions and over- or under-voltages. One often-discussed approach to solve these problems, especially in the European zonal electricity system, is regional fl exibility markets. We provide a novel metric for the design of flexibility products by combining technical requirements with a background in auction theory. This is a valuable contribution to the discussion of regional flexibility markets, which currently occurs on a largely technical or conceptual level. The metric structures 23 product parameters in four stages of different abstraction levels. By applying this metric to five fl exibility market approaches used in current German research projects, we demonstrate its usability for consistent description and comparison of flexibility products. Therefore, the metric we have developed, is a powerful instrument for structured analysis and assessment of the vast diversity of approaches to fl exibility markets and products at a high level of detail. This metric can empower national and international policy makers and practitioners in developing and assessing flexibility markets holistically and can help to simplify the implementation of best-practice solutions.

Suggested Citation

  • Erik Heilmann & Nikolai Klempp & Heike Wetzel, 2020. "Market design of regional flexibility markets: A classification metric for flexibility products and its application to German prototypical flexibility markets," MAGKS Papers on Economics 202002, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    • Handle: RePEc:mar:magkse:202002
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    File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/paper_2020/02-2020_heilmann.pdf
    File Function: First 202002
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    References listed on IDEAS

    as
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    Cited by:

    1. Karim L. Anaya & Michael G. Pollitt, 2021. "How to Procure Flexibility Services within the Electricity Distribution System: Lessons from an International Review of Innovation Projects," Energies, MDPI, vol. 14(15), pages 1-26, July.
    2. Aikaterini Forouli & Emmanouil A. Bakirtzis & Georgios Papazoglou & Konstantinos Oureilidis & Vasileios Gkountis & Luisa Candido & Eloi Delgado Ferrer & Pandelis Biskas, 2021. "Assessment of Demand Side Flexibility in European Electricity Markets: A Country Level Review," Energies, MDPI, vol. 14(8), pages 1-23, April.
    3. Andreas Zeiselmair & Simon Köppl, 2021. "Constrained Optimization as the Allocation Method in Local Flexibility Markets," Energies, MDPI, vol. 14(13), pages 1-21, June.
    4. Zhengjie You & Michel Zade & Babu Kumaran Nalini & Peter Tzscheutschler, 2021. "Flexibility Estimation of Residential Heat Pumps under Heat Demand Uncertainty," Energies, MDPI, vol. 14(18), pages 1-19, September.
    5. Kara, Güray & Tomasgard, Asgeir & Farahmand, Hossein, 2022. "Characterizing flexibility in power markets and systems," Utilities Policy, Elsevier, vol. 75(C).

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    More about this item

    Keywords

    smart markets; market design; electricity product design; fl exibility market;
    All these keywords.

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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