Regulated Expansion of Electricity Transmission Networks: The Effects of Fluctuating Demand and Wind Generation

We study the performance of different regulatory approaches for the expansion of electricity transmission networks in the light of realistic demand patterns and fluctuating wind power. In particular, we are interested in the relative performance of a combined merchant-regulatory mechanism compared to a cost-based and a merchant-like approach. In contrast to earlier research, we explicitly include both an hourly time resolution and fluctuating wind power, which allows representing demand in a very realistic way. This substantially increases the real-world applicability of results compared to previous analyses, which were based on simplifying assumptions. We show that a combined merchant-regulatory regulation, which draws on a cap over the two-part tariff of the Transco, leads to welfare outcomes far superior to the modeled alternatives. This result proves to be robust over a range of different cases and sensitivity analyses. We also find that the intertemporal rebalancing of the two-part tariff carried out by the Transco so as to expand the network is such that the fixed tariff part turns out to be relatively large compared to extension costs.Electricity, Regulation, Transmission Expansion, Wind Power

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

We discuss the implications of two price zones, i.e. one northern and southern bidding area, on the German electricity market. In the northern zone, continuous capacity additions with low variable costs cause large regional supply surpluses in the market dispatch while conventional capacity decreases in the southern zone. As the spatial imbalance of supply and load is increasing, the current single bidding area results more often in technically infeasible market results requiring curative congestion management. Additional bidding zones would enable better market integration of scarce transmission capacities in a system exposed to structural regional imbalances. Using a line sharp electricity sector model, this paper analyzes the system implications and the distributional effects of two bidding zones in the German electricity system in 2012 and 2015, respectively. Results show a decrease in cross-zonal re-dispatch levels, in particular in 2015. However, overall network congestion and re-dispatch levels increase in 2015 and also remain high for both bidding zones. Results are very sensitive to additional line investments illustrating the challenge to define stable price zones in a dynamic setting. With two bidding areas, prices in the model results increase in the southern zone and decrease in the northern zone. The average price deviation grows from 0.4 EUR/MWh in 2012 to 1.7 EUR/MWh in 2015 with absolute values being significantly higher in hours with price differences. Stakeholders within zones are exposed to the price deviations to a different extent. Distributional effects are surprisingly small compared to the wholesale price or different network charges

Testing Regulatory Regimes for Power Transmission Expansion with Fluctuating Demand and Wind Generation

Adequate extension of electricity transmission networks is required for integrating fluctuating renewable energy sources, such as wind power, into electricity systems. We study the performance of different regulatory approaches for network expansion in the context of realistic demand patterns and fluctuating wind power. In particular, we are interested in the relative performance of a combined merchant-regulatory price-cap mechanism compared to a cost-based and a non-regulated approach. We include both an hourly time resolution and fluctuating wind power. This substantially increases the real-world applicability of results compared to previous analyses. We show that a combined merchant-regulatory regulation, which draws upon a cap over the two-part tariff of the transmission company, leads to welfare outcomes superior to the other modeled alternatives. This result proves to be robust over a range of different cases, including such with large amounts of fluctuating wind power. We also evaluate the outcomes of our detailed model using the extension plans resulting from a simplified model based on average levels of load and wind power. We show that this distorts the relative performance of the different regulatory approaches.The final publication is available at Springer via http://dx.doi.org/10.1007/s11149-014-9260-

A spatial electricity market model for the power system of Kazakhstan

Kazakhstan envisions a transition towards a green economy in the next decades which poses an immense challenge as the country heavily depends on (hydro-)carbon resources, for both its economy and its energy system. In this context, there is a lack of comprehensive and transparent planning tools to assess possible sustainable development pathways in regard to their technical, economic, and environmental implications. We present such a tool with a comprehensive techno-economic model of the Kazakh electricity system which determines the hourly least-cost generation dispatch based on publicly available data on the technical and economic characteristics of power plants and the transmission infrastructure. This modeling framework accounts for the particularities of the Kazakh electricity system: i) it has a detailed representation of combined heat and power, and ii) line losses are endogenously determined using a linear approximation. Model results are examined for a typical winter week (with annual peak load) and a typical summer week (with the hour of lowest annual load) presenting regionally and temporally disaggregated results for power generation, line utilization, and nodal prices. In an application to market design, the paper compares nodal and zonal pricing as two possible pricing schemes in Kazakhstan for the envisioned strengthening of the day-ahead market. In general, the model can be readily used to analyze the least-cost dispatch of the current Kazakh electricity system and can be easily expanded to assess the sector's development. Among others, possible applications include investment in transmission lines and in the aging power plant fleet, scenarios and policy assessment for emission reduction, and questions of market liberalization and market design

Abnehmende Bedeutung der Braunkohleverstromung: Weder neue Kraftwerke noch Tagebaue benötigt

Die Zukunft der deutschen Braunkohle in einer zunehmend von erneuerbaren Energieträgern geprägten Stromwirtschaft wird derzeit kontrovers diskutiert. An allen drei Braunkohlestandorten (Rheinisches, Mitteldeutsches und Lausitzer Revier) gibt es Pläne zum Bau neuer Braunkohlekraftwerke sowie zum Aufschluss neuer Tagebaue. Eine Studie des DIW Berlin kommt zum Schluss, dass der Bau neuer Braunkohlekraftwerke sich aus betriebswirtschaftlicher Perspektive nicht lohnt. Unter Berücksichtigung von Übertragungsnetzrestriktionen sind die deutschen Braunkohlereviere zudem geographisch ungünstig gelegen. Nicht zuletzt erschwert die Nutzung der Braunkohle die Erreichung der CO2-Minderungsziele der Bundesregierung. Mit der Absage an Demonstrationsprojekte zu Abscheidung, Transport und Speicherung von CO2 haben sich frühere Hoffnungen auf eine emissionsarme Braunkohleverstromung zerschlagen. Die planerisch genehmigten Abbaumengen reichen in allen Braunkohlerevieren aus, um die bestehenden Kraftwerke bis ans Ende ihrer Lebensdauer zu versorgen. Daher gibt es keine Notwendigkeit zum Aufschluss neuer Braunkohletagebaue. Aufgabe der Politik ist nunmehr die aktive Begleitung eines zukunftsorientierten Strukturwandels in den betroffenen Regionen.In an electricity industry increasingly characterized by renewable energy sources, there is much controversy surrounding the future of lignite in Germany. In all three lignite mining regions (Rhineland, central Germany, and Lausitz), there are plans for new lignite-fired power stations and open-cast mines. A study conducted by DIW Berlin comes to the conclusion that construction of new lignite-fired power stations is not economically viable, however. Taking the transmission system restrictions into consideration, the geographical location of Germany's lignite mining regions is also unfavorable. Finally, the use of lignite makes it more difficult to achieve the CO2 emissions reduction targets set by the German government. Cancellation of demonstration projects to capture, transport, and store CO2 has defeated previous hopes for low-emission lignite power generation. The approved quantities of lignite to be mined are sufficient to supply existing power plants in all lignite mining regions until the end of their lifetime. Consequently, there is no need for any new open-cast lignite mines. The task of policy-makers now is to actively support forwardlooking structural change in the regions concerned

Open source Electricity Model for Germany (ELMOD-DE)

This data documentation introduces to nodal dispatch models and the literature of the ELMOD model framework, which focuses on bottom-up electricity sector models with detailed spatial representation of the transmission system. The paper provides the technical description of ELMOD-DE, a nodal DC load flow model for the German electricity sector. In alignment with this paper, the described model, including its GAMS code and dataset, is made publicly available as open source model on the website of the DIW Berlin. The dataset uses publicly accessible data sources and includes hourly system data for the German electricity sector of the year 2012. The data documentation also illustrates the variety of insights into the German electricity system, ELMOD-DE provides on nodal level, with examples for hourly nodal system states and aggregated results

Electricity sector data for policy-relevant modeling: Data documentation and applications to the German and European electricity markets

[Summary] The dataset for the European electricity system needs a variety of data to cover the relevant characteristics of the industry. The more general data on aggregated generation capacities, historic generation, and consumption can be found with a consistent data specification for most European countries in databases like EUROSTAT. On the other hand, more detailed data like generation capacities for conventional and renewable sources are usually not publicly available, sometimes not even on a national basis, and henceforth appropriate assumptions or commercial databases are required to retrieve the necessary information. Due to the already mentioned issue with regard to available information, setting up a consistent dataset for the European electricity system is more difficult in comparison to the German electricity system, where mostly consistent data is publicly available. Similar projects on a European level could be helpful for a consistent dataset. Having set up a dataset for Europe, the model application shows that the general tendencies on regional generation and import/export pattern can be captured. However, differences are obvious in particular regions where the model shows different results than the historic values which may be based either on the rough modeling approach or on an insufficient data supply. To that end, the presented dataset and model application are a continuous process, and further steps are required to improve the data quality as well as the modeling. Among others, the implementation of cogeneration restrictions, improvement of renewable generation and their distribution, and an intertemporal model calibration are potential improvements for the future