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Renewable Electric Energy Integration: Quantifying the Value of Design of Markets for International Transmission Capacity

Author

Listed:
  • Karsten Neuhoff
  • Rodney Boyd
  • Thilo Grau
  • Julian Barquin
  • Francisco Echavarren
  • Janusz Bialek
  • Chris Dent
  • Christian von Hirschhausen
  • Benjamin Hobbs
  • Friedrich Kunz
  • Hannes Weigt
  • Christian Nabe
  • Georgios Papaefthymiou
  • Christoph Weber

Abstract

Integrating large quantities of supply-driven renewable electricity generation remains a political and operational challenge. One of the main obstacles in Europe to installing at least 200 GWs of power from variable renewable sources is how to deal with the insufficient network capacity and the congestion that will result from new flow patterns. We model the current methodology for controlling congestion at international borders and compare its results, under varying penetrations of wind power, with a model that simulates an integrated European network that utilises nodal/localised marginal pricing. The nodal pricing simulations illustrate that congestion - and price - patterns vary considerably between wind scenarios and within countries, and that a nodal price regime could make fuller use of existing EU network capacity, introducing substantial operational cost savings and reducing marginal power prices in the majority of European countries.

Suggested Citation

  • Karsten Neuhoff & Rodney Boyd & Thilo Grau & Julian Barquin & Francisco Echavarren & Janusz Bialek & Chris Dent & Christian von Hirschhausen & Benjamin Hobbs & Friedrich Kunz & Hannes Weigt & Christia, 2011. "Renewable Electric Energy Integration: Quantifying the Value of Design of Markets for International Transmission Capacity," Discussion Papers of DIW Berlin 1166, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp1166
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Power market design; renewable power integration; congestion management; transmission economics;
    All these keywords.

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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