The impact of sector coupling and demand-side flexibility on electricity prices in a close to 100% renewable power system

Since variable renewables with low marginal costs will constitute the dominant source of power in a fully renewable European power system, wholesale electricity prices could be expected to decrease due to the resulting shift in the marginal cost curve for the power supply. Yet, this effect can be mitigated by the increasing elasticity of demand. We model scenarios of fully renewable European power systems with varying levels of flexibility on the demand side and thermal capacity on the supply side. First, we apply the open-source energy system modelling framework Backbone to optimise investments in new capacities in the scenarios. We enforce the desired level of thermal capacity by adding respective constraints to the model. On the demand side, we include other energy sectors by introducing industrial hydrogen demand, energy demand for electric vehicles, and heating demand for buildings. Using the resulting optimal capacity mixes, we subsequently optimise operations to simulate the European electricity market. As a result, we find that the flexible actors on the demand side can help stabilise wholesale electricity prices in renewable power systems, particularly with very high shares of variable renewables that incur very low marginal costs

Temporal flexibility options in electricity market simulation models: Deliverable D4.1

Project TradeRES - New Markets Design & Models for 100% Renewable Power Systems: https://traderes.eu/about/ABSTRACT: This report covers the implementation of temporal flexibility options in TradeRES’ agent-based electricity market simulations models. Within this project, the term “temporal flexibility option” was defined as an asset or measure supporting the power system to balance electric demand and supply and compensate for their stochastic fluctuations stemming from, e.g., weather or consumer behaviour by adjusting demand and/or supply as a function over time or by reducing their forecast uncertainty. Other reports from the same work package of TradeRES are published almost simultaneously, each focussing on another aspect of market model enhancements. These accompanying reports address sectoral flexibility, spatial flexibility, actor types, and modelling requirements for market designs. Flexibility options covered in this report were selected with regard to a predominantly temporal characteristic, a contribution to TradeRES’ assessment of market designs, and the feasibility to be implemented in at least one of the agent based models (ABM) during the project’s lifetime. The technical aspects of “Load shedding”, “Load shifting”, “Electricity storage”, and “Real-time pricing” were selected for implementation. In addition, the following new electricity market products were selected for implementation: “Rolling market clearing”, “Trading with shorter time units”, and “Variable market closure lead times”.N/

Characterization of new flexible players: Deliverable D3.2

Project TradeRES - New Markets Design & Models for 100% Renewable Power Systems: https://traderes.eu/about/ABSTRACT: The subject matter of this report is the analysis of the electricity markets’ actors’ scene, through the identification of actor classes and the characterisation of actors from a behavioural and an operational perspective. The technoeconomic characterization of market participants aims to support the upcoming model enhancements by aligning the agent-based model improvements with the modern market design challenges and the contemporary characteristics of players. This work has been conducted in the context of task T3.2, which focuses on the factorization of the distinctive operational and behavioural characteristics of players in market structures. Traditional parties have been considered together with new and emerging roles, while special focus has been given on new actors related to flexible technologies and demand-side response. Among the main objectives have been the characterization of individual behaviours, objectives and requirements of different electricity market players, considering both the traditional entities and the new distributed ones, and the detailed representation of the new actors.N/

New market designs in electricity market simulation models: Deliverable D4.5

Project TradeRES - New Markets Design & Models for 100% Renewable Power Systems: https://traderes.eu/about/ABSTRACT: To integrate a high share of renewables in a future system, several modifications to the electricity market rules may need to be implemented. The most relevant market design concepts were identified from the literature and reported in work package 3. There are several uncertainties, for instance with respect to the questions of whether a future electricity market will provide enough incentives for investment in variable renewable energy sources (vRES) – mainly solar and wind energy – and in flexibility options, especially for long periods with insufficient vRES generation. In this deliverable, the modelling requirements to analyse the new market rules are determined. The modelling efforts will reflect the main policy choices and are based on the strengths of the modelling capabilities from the consortium. The model enhancements to represent the temporal, spatial and sectoral flexibility will be approached in deliverables 4.1 to 4.3. For this reason, these topics will be described only briefly in this deliverable.N/

Market design for a reliable ~100% renewable electricity system: Deliverable D3.5

Project TradeRES - New Markets Design & Models for 100% Renewable Power Systems: https://traderes.eu/about/ABSTRACT: The goal of this report is to identify in which respects the design and regulation of electricity markets needs to be improved in order facilitate a (nearly) completely decarbonized electricity system. It provides a basis for scoping the modeling analyses that are to be performed in subsequent work packages in the TradeRES project. These simulations will provide the basis for an update of this deliverable in the form of a more precise description of an all-renewable electricity market design. In this first iteration1 of deliverable 3.5, we analyze how the current design of electricity markets may fall short of future needs. Where there is a lack of certainty about the best market design choices, we identify alternative choices. Alternatives may concern a choice between policy intervention and no intervention or different intervention options. Section 2 outlines current European electricity market design and the key pieces of European legislation that underlie it. The European target model is zonal pricing with bidding zones that are defined as geographic areas within the internal market without structural congestion. That implies that within one bidding zone electricity can be traded without considering grid constraints and there are uniform wholesale prices in each zone. The main European markets are Nordpool, EPEX and MIBEL. Trading between zones in the European Price Coupling Region occurs through an implicit auction where price and quantity are computed for every hour of the next day, using EUPHEMIA, a hybrid algorithm for flowbased market coupling that is considered the best practice in Europe at this time.N/

Performance indicators: quantification of market performance: Deliverable D5.1

Project TradeRES - New Markets Design & Models for 100% Renewable Power Systems: https://traderes.eu/about/ABSTRACT: The present deliverable was developed as part of the research activities of the TradeRES project Task 5.1 – Performance indicators: quantification of market performance. This report presents the first version of the deliverable 5.1, which provides a list of the (key) market performance indicators (MPIs) that will be used to assess the impact of elec tricity market designs developed and tested in the TradeRES project. In specific, these indicators will be used in the case studies to assess and quantify the performance of the market designs that were developed in WP3. The foreseen recommendations regarding the evolution of the market design considering a ~100% renewable power system and the dissemination activities will also focus on the performance obtained for the different MPIs. As a first step to defining the TradeRES’ MPIs, internal information was analysed, namely, the objectives and the research questions addressed by the project. To complement this information, several ongoing and completed European projects have been reviewed. For the definition of MPIs, a template was created. The template comprises basic information such as the name and acronym of the MPI, its calculation methodology and optimal value. A total of 48 MPIs were identified, and all were classified into four different group domains identified: technical, economic, environmental and social. The goal of such classification is to facilitate filtering and finding the MPIs of particular interest for the reader.N/