IDEAS home Printed from https://ideas.repec.org/p/ris/ewikln/2013_010.html
   My bibliography  Save this paper

Flexibility in Europe's Power Sector - an Additional Requirement or an Automatic Complement?

Author

Listed:
  • Bertsch, Joachim

    () (Energiewirtschaftliches Institut an der Universitaet zu Koeln)

  • Growitsch, Christian

    () (Energiewirtschaftliches Institut an der Universitaet zu Koeln)

  • Lorenczik, Stefan

    () (Energiewirtschaftliches Institut an der Universitaet zu Koeln)

  • Nagl, Stephan

    () (Energiewirtschaftliches Institut an der Universitaet zu Koeln)

Abstract

By 2050, the European Union aims to reduce greenhouse gases by more than 80 %. The EU member states have therefore declared to strongly increase the share of renewable energy sources (RES-E) in the next decades. Given a large deployment of wind and solar capacities, there are two major impacts on electricity systems: First, the electricity system must be flexible enough to cope with the volatile RES-E generation, i.e., ramp up supply or ramp down demand on short notice. Second, sufficient back-up capacities are needed during times with low feed-in from wind and solar capacities. This paper analyzes whether there is a need for additional incentive mechanisms for flexibility in electricity markets with a high share of renewables. For this purpose, we simulate the development of the European electricity markets up to the year 2050 using a linear investment and dispatch optimization model. Flexibility requirements are implemented in the model via ramping constraints and provision of balancing power dependent of current renewables feed-in. We fi nd that an increase in fluctuating renewables has a tremendous impact on the volatility of the residual load and consequently on the flexibility requirements. However, any market design that incentivizes investments in least (total system) cost generation investment does not need additional incentives for flexibility. The main trigger for investing in flexible resources are the achievable full load hours and the need for backup capacity. In a competitive market, the cost-efficient technologies that are most likely to be installed, i.e.,gas- red power plants or flexible CCS plants, provide flexibility as a by-product. Under the condition of system adequacy, flexibility never poses a challenge in a cost-minimal capacity mix. Therefore, any market design incentivizing investments in efficient generation thus provides flexibility as an automatic complement.

Suggested Citation

  • Bertsch, Joachim & Growitsch, Christian & Lorenczik, Stefan & Nagl, Stephan, 2013. "Flexibility in Europe's Power Sector - an Additional Requirement or an Automatic Complement?," EWI Working Papers 2013-10, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
  • Handle: RePEc:ris:ewikln:2013_010
    as

    Download full text from publisher

    File URL: http://www.ewi.uni-koeln.de/fileadmin/user_upload/Publikationen/Working_Paper/EWI_WP_13-10_Flexibility_in_Europe_s_power_sector.pdf
    File Function: Full text
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Nagl, Stephan & Fürsch, Michaela & Jägemann, Cosima & Bettzüge, Marc Oliver, 2011. "The economic value of storage in renewable power systems - the case of thermal energy storage in concentrating solar plants," EWI Working Papers 2011-8, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    2. Cramton, Peter & Stoft, Steven, 2008. "Forward reliability markets: Less risk, less market power, more efficiency," Utilities Policy, Elsevier, vol. 16(3), pages 194-201, September.
    3. Nicolosi, Marco, 2010. "Wind power integration and power system flexibility-An empirical analysis of extreme events in Germany under the new negative price regime," Energy Policy, Elsevier, vol. 38(11), pages 7257-7268, November.
    4. Fürsch, Michaela & Hagspiel, Simeon & Jägemann, Cosima & Nagl, Stephan & Lindenberger, Dietmar & Tröster, Eckehard, 2013. "The role of grid extensions in a cost-efficient transformation of the European electricity system until 2050," Applied Energy, Elsevier, vol. 104(C), pages 642-652.
    5. De Jonghe, Cedric & Delarue, Erik & Belmans, Ronnie & D'haeseleer, William, 2011. "Determining optimal electricity technology mix with high level of wind power penetration," Applied Energy, Elsevier, vol. 88(6), pages 2231-2238, June.
    6. Joskow, Paul L., 2008. "Capacity payments in imperfect electricity markets: Need and design," Utilities Policy, Elsevier, vol. 16(3), pages 159-170, September.
    7. Denholm, Paul & Hand, Maureen, 2011. "Grid flexibility and storage required to achieve very high penetration of variable renewable electricity," Energy Policy, Elsevier, vol. 39(3), pages 1817-1830, March.
    8. Jägemann, Cosima & Fürsch, Michaela & Hagspiel, Simeon & Nagl, Stephan, 2013. "Decarbonizing Europe's power sector by 2050 — Analyzing the economic implications of alternative decarbonization pathways," Energy Economics, Elsevier, vol. 40(C), pages 622-636.
    9. Richter, Jan, 2011. "DIMENSION - A Dispatch and Investment Model for European Electricity Markets," EWI Working Papers 2011-3, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    10. Matthias Finkenrath, 2011. "Cost and Performance of Carbon Dioxide Capture from Power Generation," IEA Energy Papers 2011/5, OECD Publishing.
    11. Möst, Dominik & Fichtner, Wolf, 2010. "Renewable energy sources in European energy supply and interactions with emission trading," Energy Policy, Elsevier, vol. 38(6), pages 2898-2910, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Krakowski, Vincent & Assoumou, Edi & Mazauric, Vincent & Maïzi, Nadia, 2016. "Reprint of Feasible path toward 40–100% renewable energy shares for power supply in France by 2050: A prospective analysis," Applied Energy, Elsevier, vol. 184(C), pages 1529-1550.
    2. Karsten Neuhoff & Sophia Rüster & Sebastian Schwenen, 2015. "Power Market Design beyond 2020: Time to Revisit Key Elements?," Discussion Papers of DIW Berlin 1456, DIW Berlin, German Institute for Economic Research.
    3. Christian Gambardella & Michael Pahle & Wolf-Peter Schill, 2016. "Do Benefits from Dynamic Tariffing Rise? Welfare Effects of Real-Time Pricing under Carbon-Tax-Induced Variable Renewable Energy Supply," Discussion Papers of DIW Berlin 1621, DIW Berlin, German Institute for Economic Research.
    4. repec:eee:energy:v:137:y:2017:i:c:p:823-833 is not listed on IDEAS
    5. Green, Richard & Léautier, Thomas-Olivier, 2015. "Do costs fall faster than revenues? Dynamics of renewables entry into electricity markets," TSE Working Papers 15-591, Toulouse School of Economics (TSE).
    6. repec:eee:eecrev:v:99:y:2017:i:c:p:130-150 is not listed on IDEAS
    7. repec:eee:ejores:v:267:y:2018:i:2:p:643-658 is not listed on IDEAS
    8. Fichter, Tobias & Soria, Rafael & Szklo, Alexandre & Schaeffer, Roberto & Lucena, Andre F.P., 2017. "Assessing the potential role of concentrated solar power (CSP) for the northeast power system of Brazil using a detailed power system model," Energy, Elsevier, vol. 121(C), pages 695-715.
    9. Cebulla, F. & Fichter, T., 2017. "Merit order or unit-commitment: How does thermal power plant modeling affect storage demand in energy system models?," Renewable Energy, Elsevier, vol. 105(C), pages 117-132.
    10. Krakowski, Vincent & Assoumou, Edi & Mazauric, Vincent & Maïzi, Nadia, 2016. "Feasible path toward 40–100% renewable energy shares for power supply in France by 2050: A prospective analysis," Applied Energy, Elsevier, vol. 171(C), pages 501-522.
    11. Sinn, Hans-Werner, 2017. "Buffering volatility: A study on the limits of Germany's energy revolution," European Economic Review, Elsevier, vol. 99(C), pages 130-150.
    12. Merrick, James H., 2016. "On representation of temporal variability in electricity capacity planning models," Energy Economics, Elsevier, vol. 59(C), pages 261-274.
    13. repec:eee:rensus:v:82:y:2018:i:p3:p:3168-3178 is not listed on IDEAS
    14. Malischek, Raimund & Trüby, Johannes, 2016. "The future of nuclear power in France: an analysis of the costs of phasing-out," Energy, Elsevier, vol. 116(P1), pages 908-921.
    15. Kotowicz, Janusz & Bartela, Łukasz & Węcel, Daniel & Dubiel, Klaudia, 2017. "Hydrogen generator characteristics for storage of renewably-generated energy," Energy, Elsevier, vol. 118(C), pages 156-171.
    16. repec:eee:rensus:v:81:y:2018:i:p1:p:1049-1086 is not listed on IDEAS
    17. Devine, Mel & Bertsch, Valentin, 2016. "Examining the Benefits of Load Shedding Strategies using a Rolling-Horizon Stochastic Mixed Complementarity Equilibrium Model," Papers WP541, Economic and Social Research Institute (ESRI).
    18. Zakeri, Behnam & Virasjoki, Vilma & Syri, Sanna & Connolly, David & Mathiesen, Brian V. & Welsch, Manuel, 2016. "Impact of Germany's energy transition on the Nordic power market – A market-based multi-region energy system model," Energy, Elsevier, vol. 115(P3), pages 1640-1662.
    19. Batas Bjelić, Ilija & Rajaković, Nikola & Krajačić, Goran & Duić, Neven, 2016. "Two methods for decreasing the flexibility gap in national energy systems," Energy, Elsevier, vol. 115(P3), pages 1701-1709.

    More about this item

    Keywords

    Electricity; power plant fleet optimization; renewable energy; flexibility; market design;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:ewikln:2013_010. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sabine Williams). General contact details of provider: http://edirc.repec.org/data/ewikode.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.