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Offshore Market Design in Integrated Energy systems: A Case Study on the North Sea Region towards 2050

Author

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  • Juan Gea-Bermúdez
  • Lena Kitzing
  • Dogan Keles

Abstract

Offshore grids, with multiple interacting transmission and generation units connecting to the shores of several countries, are expected to have an important role in the cost-effective energy transition. Such massive new infrastructure expanding into a new physical space will require new offshore energy market designs. Decisions on these designs today will influence the overall value potential of offshore grids in the future. This paper investigates different possible market configurations and their impacts on operational costs and required congestion management, as well as prices and emissions. We use advanced integrated energy system optimisation, applied to a study case on the North Sea region towards 2050. Our analysis confirms the well-known concept of nodal pricing as the most preferable market configuration. Nodal pricing minimises costs (0.2–1.6 b€/year lower) and CO 2 emissions (0.6–5.6 Mton/year lower) with respect to alternative market designs investigated. The performance of the different market designs is highly influenced by the overall architecture of the offshore grid, and the rest of the energy system. E.g., flexibility options help reducing the spread between the designs. But the results are robust: nodal pricing in offshore grids emerges as the preferable market configuration for a cost-effective energy transition to carbon neutrality.

Suggested Citation

  • Juan Gea-Bermúdez & Lena Kitzing & Dogan Keles, 2024. "Offshore Market Design in Integrated Energy systems: A Case Study on the North Sea Region towards 2050," The Energy Journal, , vol. 45(4), pages 27-58, July.
    • Handle: RePEc:sae:enejou:v:45:y:2024:i:4:p:27-58
    DOI: 10.1177/01956574241277303
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    References listed on IDEAS

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    1. Joachim Bertsch & Tom Brown & Simeon Hagspiel & Lisa Just, 2017. "The Relevance of Grid Expansion under Zonal Markets," The Energy Journal, , vol. 38(5), pages 129-152, September.
    2. Gea-Bermúdez, Juan & Bramstoft, Rasmus & Koivisto, Matti & Kitzing, Lena & Ramos, Andrés, 2023. "Going offshore or not: Where to generate hydrogen in future integrated energy systems?," Energy Policy, Elsevier, vol. 174(C).
    3. repec:aen:journl:ej38-5-just is not listed on IDEAS
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