Electricity Market Design 2030-2050: Moving Towards Implementation

Climate change and ambitious emission-reduction targets call for an extensive decarbonization of electricity systems, with increasing levels of Renewable Energy Sources (RES) and demand flexibility to balance the variable and intermittent electricity supply. A successful energy transition will lead to an economically and ecologically sustainable future with an affordable, reliable, and carbon-neutral supply of electricity. In order to achieve these objectives, a consistent and enabling market design is required. The Kopernikus Project SynErgie investigates how demand flexibility of the German industry can be leveraged and how a future-proof electricity market design should be organized, with more than 80 project partners from academia, industry, governmental and non-governmental organizations, energy suppliers, and network operators. In our SynErgie Whitepaper Electricity Spot Market Design 2030-2050 [1], we argued for a transition towards Locational Marginal Prices (LMPs) (aka. nodal prices) in Germany in a single step as a core element of a sustainable German energy policy. We motivated a well-designed transition towards LMPs, discussed various challenges, and provided a new perspective on electricity market design in terms of technological opportunities, bid languages, and strategic implications. This second SynErgie Whitepaper Electricity Market Design 2030-2050: Moving Towards Implementation aims at further concretizing the future German market design and provides first guidelines for an implementation of LMPs in Germany. Numerical studies –while not being free of abstractions –give evidence that LMPs generate efficient locational price signals and contribute to manage the complex coordination challenge in (long-term) electricity markets, ultimately reducing price differences between nodes. Spot and derivatives markets require adjustments in order to enable an efficient dispatch and price discovery, while maintaining high liquidity and low transaction costs. Moreover, a successful LMP implementation requires an integration into European market coupling and appropriate interfaces for distribution grids as well as sector coupling. Strategic implications with regard to long-term investments need to be considered, along with mechanisms to support RES investments. As a facilitator for an LMP system, digital technologies should be considered jointly with the market design transition under an enabling regulatory framework. Additional policies can address distributional effects of an LMP system and further prevent market power abuse. Overall, we argue for a well-designed electricity spot market with LMPs, composed of various auctions at different time frames, delivering an efficient market clearing, considering grid constraints, co-optimizing ancillary services, and providing locational prices according to a carefully designed pricing scheme. The spot market is tightly integrated with liquid and accessible derivatives markets, embedded into European market coupling mechanisms, and allows for functional interfaces to distribution systems and other energy sectors. Long-term resource adequacy is ensured and existing RES policies transition properly to the new market design. Mechanisms to mitigate market power and distributional effects are in place and the market design leverages the potential of modern information technologies. Arapid expansion of wind andsolar capacity will be needed to decarbonize the integrated energy system but will most likely also increase the scarcity of the infrastructure. Therefore, an efficient use of the resource "grid" will be a key factor of a successful energy transition. The implementation of an LMPs system of prices with finer space and time granularity promises many upsides and can be a cornerstone for a futureproof electricity system, economic competitiveness, and a decarbonized economy and society. Among the upsides, demand response (and other market participants with opportunity costs) can be efficiently and coherently incentivized to address network constraints, a task zonal systems with redispatch fail at. The transition to LMPs requires a thorough consideration of all the details and specifications involved in the new market design. With this whitepaper, we provide relevant perspectives and first practical guidelines for this crucial milestone of the energy transition

Electricity Market Design 2030-2050: Shaping Future Electricity Markets for a Climate-Neutral Europe

Speeding up the energy transition in the European Union (EU) is a major task to quickly reduce harmful greenhouse gas emissions. Market design plays a crucial role in the decarbonization of the European energy system, driving the expansion of both Renewable Energy Sources (RES) and accompanying flexibility sources. In particular, demand flexibility by energy-intensive industrial companies can play a key role. By flexibilizing their production processes, industrial companies can contribute to an increased use of variable RES (in the following referred to as Variable Renewable Energy (VRE)) to lower the CO2 footprint of their products with positive effects on economic competitiveness. Together with other flexibility sources like electric vehicles, the EU can transition to a just, low-carbon society and economy with benefits for all. However, to actually realize these benefits, market design must account for the changing production and consumption characteristics, e.g., the intermittency of VRE. Starting with current challenges of the energy transition that need to be solved with a future market designin the EU, the whitepaper takes alternative market design options and recent technological developments into account, which are highly intertwined. The whitepaper elaborates on the role of, for instance, flexibility, digital technologies, market design with locational incentives, and possible transition pathways in a European context. The “Clean energy for all Europeans” package offers a new opportunity to deepen the integration of different national electricity systems, whereby Transmission System Operators (TSOs) are required to reserve at least 70% of transmission capacities for cross-border trades from 2025 onwards. The corresponding scarcity of transmission capacities on the national level, however, may aggravate congestion to a critical extent, calling for transformational changes in market design involving, e.g., a redefinition of bidding zones close to the network-node level. The present whitepaper can be seen as part of a series of whitepapers on electricity market design 2030 - 2050 [14, 15] and continues the analysis of regionally differentiated prices or Locational Marginal Pricing (LMP) as a means to address congestion problems in future VRE-based electricity systems. Thereby, the whitepaper extends the findings of the previous two whitepapers (where in the latter whitepapers, e.g., a detailed discussion of the pros and cons of LMP can be found) and elaborates on the question how LMP could be implemented in one or several European countries and how possible implementation pathways may look like in a coupled European system. Moreover, the whitepaper describes preparatory steps that are necessary for the introduction of LMP, and – at the same time – create advantages for countries under both, a nodal and zonal market design. All in all, the results and outcomes of the whitepaper shall support the market design transition in Europe and, thus, the integration and activation of flexibility potentials to foster a fast reduction of CO2 emissions through a better use of VRE. Therefore, the whitepaper contributes with concrete policy measures to the overarching vision of a future European electricity market design that bases on low-carbon technologies and enhances welfare and fairness, while ensuring economic competitiveness of Europe. We would like to thank all the partners and are grateful for the financial support from the Federal Ministry of Education and Research as well as the Project Management Jülich. Martin Bichler, Hans Ulrich Buhl, and Martin Weibelzahl (SynErgie) Antonello Monti (OneNet

Assessing the need for power system flexibility on a global level: A multi-criteria assessment index

To effectively cope with the intermittency of VRE, power systems will need different flexibility options. The future portfolio of flexibility options will differ among countries, as it will be determined by the political, economic, social, technological, legal, and environmental factors of a country. Thus, some countries might have a greater need for flexibility options than others. Generation and expansion planning for renewable power systems on a national level are complex and require large long-term investments. Therefore, it is crucial to estimate the "need for flexibility" in energy systems from a macro-level. By assessing relevant indicators (e.g., economic) and different boundary conditions (e.g., VRE capacity), power system planners, policymakers, operators, and regulators can evaluate the need for flexibility in power systems and prioritize the needed actions. Published research and international reports do not refer to the countries with the highest need for flexibility options in respective power systems. In this regard, the aim of this paper is to answer the following question: "Which countries in the world have the highest need for flexibility options from a macro-energy systems point of view?" To answer our question, first, we have identified relevant indicators from the literature that can help us to estimate the "need for flexibility" in national power systems. Second, we weighed the different indicators according to their importance by using the analytical hierarchy process (AHP) of the multi- criteria decision analysis (MCDA) process. Finally, this paper proposes a “global index for flexibility need” using these indicators. As for the results, countries were ranked in this index based on indicators and already show us the promising countries with the top 10 dominated by European countries. This index works as a macro-level assessment framework that provides the comparative position of countries with regard to the need for flexibility. This index will help technology providers and increase investor confidence to choose countries with the highest "flexibility need" for technology implementation. This will help relevant stakeholders to focus on key countries first to accelerate the integration of VRE and thus help the global energy transition

Design a lightweight low power multiplier circuits using quantum dot cellular automata architecture

In this paper, we propose a powerful multiplier circuit using QCA 3-dot cell. The architecture is very competent to calculate the multiplication between two numbers. Here, we use a 4-bit 3-dot QCA adder to construct our proposed circuit, which has less number of cells and area from other QCA based adders. [1,2,3] Our new and novel design is improved a lot from existing multipliers, the suggested multiplier circuit enhances 28% on cell, 99% on area than the current finest known one.</p

Potentials of sector coupling to improve the resilience of electricity and gas networks

Global warming leads to an increase in extreme weather events that considerably threaten critical infrastructures (e.g., electricity or gas networks). The failure of one critical infrastructure may have far-reaching consequences triggering a “cascade of failures” that affects other critical infrastructures. As extreme weather events usually hit affected regions unexpectedly, flexibility in energy systems is key to sustain resilience and rapidly respond to changing conditions, e.g., failed network lines. Hence, we analyze sector coupling (SC) as one option to increase flexibility and exploit synergies between electricity and gas networks. We investigate SC investments that allow for a bi-directional conversion of gas and electricity in the form of gas-fired power plants or power-to-X technologies and their effect on resilience. We propose a two-level market model where, in the upper-level problem, long-term investments in SC technologies are made in anticipation of short-term market clearing as well as uncertain failures and, in the lower-level problem, SC technologies may be activated. We model extreme weather events as a set of discrete scenarios that pose an external risk to the energy system. In our paper, we derive optimal SC investments representing a trade-off between enhancing system resilience and increasing investments. Moreover, we derive optimal SC responses for selected weather events to guide the operation of SC plants under extreme conditions

Indicators for assessing the necessity of power system flexibility: a systematic review and literature meta‐analysis

There are different flexibility options to align power systems to volatile feed-in of renewable electricity sources. The flexibility options differ in the dimensions of time, spatiality, and resource type. To make policy decisions on future energy systems, it is necessary to get a top-down indication of how much power system flexibility is needed. With the ongoing energy transition, there is yet no comprehensive overview of indicators that describe which dimension of flexibility will be necessary to what extent for different energy systems. Therefore, this paper provides a first overview of indicators that can be used to assess the necessity of power system flexibility. Thus, we do a systematic literature review to identify indicators that allow us to estimate the necessity of power system flexibility. We conduct a meta-analysis of these indicators and categorize them as indicators that either stand for an increasing or decreasing necessity of power system flexibility. Our paper can help inform policy, assess needed changes to system operations, increase stakeholder acceptance and investor confidence in implementing new technology and measures