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Two price zones for the German electricity market — Market implications and distributional effects

Author

Listed:
  • Egerer, Jonas
  • Weibezahn, Jens
  • Hermann, Hauke

Abstract

We discuss the implications of two price zones (i.e., one northern and one southern bidding area) on the German electricity market. In the northern zone, continuous increases in capacity with low variable costs cause large regional supply surpluses in the market dispatch, while in the southern zone conventional capacity decreases. As the spatial imbalance of supply and load is increasing, the current single bidding area more often results in technically infeasible market results, requiring curative congestion management measures.

Suggested Citation

  • Egerer, Jonas & Weibezahn, Jens & Hermann, Hauke, 2016. "Two price zones for the German electricity market — Market implications and distributional effects," Energy Economics, Elsevier, vol. 59(C), pages 365-381.
  • Handle: RePEc:eee:eneeco:v:59:y:2016:i:c:p:365-381
    DOI: 10.1016/j.eneco.2016.08.002
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    References listed on IDEAS

    as
    1. Jonas Egerer, 2016. "Open Source Electricity Model for Germany (ELMOD-DE)," Data Documentation 83, DIW Berlin, German Institute for Economic Research.
    2. Hogan, William W, 1992. "Contract Networks for Electric Power Transmission," Journal of Regulatory Economics, Springer, vol. 4(3), pages 211-242, September.
    3. M. Bjørndal & K. Jørnsten & V. Pignon, 2003. "Congestion management in the Nordic power market - counter purchases and zonal pricing," Competition and Regulation in Network Industries, Intersentia, vol. 4(3), pages 271-293, September.
    4. Friedrich Kunz & Clemens Gerbaulet & Christian von Hirschhausen, 2013. "Mittelfristige Strombedarfsdeckung durch Kraftwerke und Netze nicht gefährdet," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 80(48), pages 25-37.
    5. Löschel, Andreas & Flues, Florens & Pothen, Frank & Massier, Philipp, 2013. "Den Strommarkt an die Wirklichkeit anpassen: Skizze einer neuen Marktordnung," ZEW Discussion Papers 13-065, ZEW - Leibniz Centre for European Economic Research.
    6. Löschel, Andreas & Flues, Florens & Pothen, Frank & Massier, Philipp, 2013. "Den deutschen Strommarkt an die Wirklichkeit anpassen: Skizze einer neuen Marktordnung," ZEW policy briefs 7/2013, ZEW - Leibniz Centre for European Economic Research.
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    Cited by:

    1. repec:eee:enepol:v:116:y:2018:i:c:p:198-209 is not listed on IDEAS
    2. repec:eee:enepol:v:108:y:2017:i:c:p:524-537 is not listed on IDEAS
    3. repec:eee:energy:v:177:y:2019:i:c:p:487-502 is not listed on IDEAS
    4. Geoffrey J. Blanford & Christoph Weissbart, 2019. "A Framework for Modeling the Dynamics of Power Markets – The EU-REGEN Model," ifo Working Paper Series 307, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    5. Janda, Karel & Málek, Jan & Rečka, Lukáš, 2017. "Influence of renewable energy sources on transmission networks in Central Europe," Energy Policy, Elsevier, vol. 108(C), pages 524-537.
    6. repec:gam:jeners:v:12:y:2019:i:6:p:1153-:d:216930 is not listed on IDEAS
    7. repec:gam:jeners:v:12:y:2019:i:5:p:839-:d:210680 is not listed on IDEAS
    8. repec:eee:eneeco:v:75:y:2018:i:c:p:583-601 is not listed on IDEAS
    9. Christoph Weissbart, 2018. "Decarbonization of Power Markets under Stability and Fairness: Do They Influence Efficiency?," ifo Working Paper Series 270, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    10. Tangerås, Thomas & Wolak, Frank A., 2017. "The Competitive Effects of Linking Electricity Markets Across Space and Time," Working Paper Series 1184, Research Institute of Industrial Economics.

    More about this item

    Keywords

    German electricity market; Congestion management; Bidding zone configuration; Distributional effects.;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • 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
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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