• Energy Research
• 7. Clean energy close

With rising shares of fluctuating renewable energy generation, the role of electricity storage becomes increasingly important. However, European pumped storage plants (PSPs) are currently confronted with economic challenges and their potential for smoothing the residual load curve is consequently not fully exploited. In this paper, the long-term effects of load-smoothing and the typical price-based PSP operation are compared with an emphasis on the development of the wholesale electricity prices and the generation adequacy. The study is conducted using an agent-based simulation model of the day-ahead electricity market that has been extended by a methodology to heuristically dispatch the PSPs in Germany. The results show, that the contribution load-smoothing PSP operation can make to improving generation adequacy is rather small. Putting a strategic reserve in place reduces the differences between price-based and load-smoothing PSP operation even further. Moreover, load-smoothing PSP operation goes along with slightly increased wholesale electricity prices as compared to price-based operation.

Abstract The effectiveness of the energy-only market (EOM) in providing sufficient incentives for investments is intensively discussed in Europe. While supporters claim that an improved EOM can guarantee generation adequacy, energy suppliers in particular favor the introduction of a capacity market to finance power plant investments. However, there is a lack of quantitative assessment of market design options taking into account individual decisions of market players. Existing studies mainly include a system view based on a central planner optimization. This paper on the other hand is based on an agent-based simulation model for the German electricity market. This method can explicitly incorporate individual investment decisions and aggregate them to present a holistic view of the system. Our results show that an EOM extended with a strategic reserve can incentivize investments, and guarantee supply security in a market with high share of renewable energies. However, the generation adequacy can be more easily achieved with a capacity market. Furthermore, the cost advantage of an EOM diminishes in the long-term, as scarcity prices in the EOM lead to similar system costs as with a capacity market.

Abstract The transparency and open availability of energy system models and their input data are of particular importance due to their increasing complexity and policy relevance. In recent years, a large number of model-based scenario analyses have been carried out. These analyses are based on diverse model approaches and lead to a rather broad range of results, which due to different data structures and mathematical approaches are hardly directly comparable. In this paper, detailed and harmonized scenario input parameters are the basis of a systematic model experiment including four electricity system models. In the following, the different model approaches are classified and their respective results are discussed transparently. Consequently, differences in results can be interlinked directly with model properties. The results are compared focusing on a selection of output parameters, such as investment and dispatch decisions in flexible power plants, storage dispatch, wholesale electricity prices, CO2 emissions and generation adequacy in hours with critical supply situations in Germany until 2030. Differences in the results are traced back to conceptual differences as the models can be distinguished not only with regard to their mathematical approaches, but also to their level of detail. Results indicate that next to the differences of the mathematical approaches (i.e., linear optimization vs. agent-based simulation), the myopic foresight perspective (e.g., rolling planning algorithm with 24- and 36-hours loops vs. perfect foresight in a closed loop for one year) are decisive for the range of obtained results.

In liberalized energy markets, the issue of generation adequacy gains more and more in importance. Especially demand response is regarded as a crucial measure to handle supply and demand imbalances caused by inflexible renewable energy resources (RES) power production. However, the influence of demand response on wholesale electricity prices has not been sufficiently analyzed up to now.

In this article, cross-border effects of different market design options are analyzed using Switzerland, which is strongly interconnected to larger neighboring markets, as a case study. An investigation is conducted with an agent-based model where in one scenario, all market designs are represented according to the current legislation, and in another, energy-only markets (EOM) are assumed in all considered countries. The results show that wholesale electricity prices are highly dependent on the chosen market design and in the annual average are up to 27% higher in the EOM scenario. Due to expected larger interconnector capacities, this increase is evident in all simulated markets. Furthermore, the results indicate that the planned market design changes in the neighboring countries decrease investments in Switzerland. However, generation adequacy is still guaranteed due to the high Swiss hydropower storage capacity. Our results suggest that, under the current circumstances, a domestic mechanism in Switzerland is not required.

In recent years, electricity markets have been characterized by a growing share of fluctuating renewable energies, which has increased concerns about the security of electricity supply. As a consequence, existing market designs are adapted, and new capacity remuneration mechanisms are introduced. However, these mechanisms entail new challenges, and it is disputed whether they are indeed needed. In this article, an overview of the current debate on the necessity of capacity remuneration mechanisms is provided. Furthermore, initial experiences of real-world implementations are discussed, and common findings in the literature, categorized by their economic implications, are derived. Finally, shortcomings in existing research and open questions that need to be addressed in future works are pointed out.

Following Russia's invasion of Ukraine in 2022, European countries took significant steps to reduce their reliance on energy imports from Russia, particularly in the gas and coal sectors. At the same time, to import less primary energy in the future, some countries have adopted new renewable energy targets. The question is to what extent the increase in gas and coal prices can contribute to refinancing renewable energy on the electricity wholesale market. To investigate this, an agent-based approach is used to examine the market values of renewable energies in several European countries until 2040. It is shown that increased expansion targets have a more substantial negative impact on the market values of renewable energies than increased gas and coal prices have a positive effect. In addition, it is observed that the introduction of capacity markets does not significantly influence market values and wholesale electricity prices in the medium term. However, by 2040, lower electrici

The introduction of capacity remuneration mechanisms is being intensively discussed among European decision makers, as concerns about generation adequacy in the electricity sector are growing among stakeholders. Different mechanisms have already been implemented or will be introduced in the near future in several European countries. This policy brief focuses on selected experiences in Belgium, France, Spain, Sweden and the UK. The implementation of capacity remuneration mechanisms yielded mixed experiences so far, thus making them subject to repeated adjustments. Although the mechanisms seem to have achieved their goal of purchasing the targeted capacity volumes in different auctions, their efficiency has not yet been sufficiently assessed. While on the one hand some mechanisms are removed again (eg. capacity payments in Spain or the strategic reserve in Sweden), on the other hand new mechanisms are introduced (e.g. decentral obligation in France). The introduction of capacity remuneration mechanisms, however, should go alongside a Europe-wide coordination to avoid market distortions, as the introduction of a mechanism can interfere with the ongoing process of an integrated European electricity market and hinder cross-border electricity trading. At least the participation of interconnectors or capacities from non-domestic areas should be admitted within national mechanisms.