@article{RuhnauStieweMuesseletal., author = {Ruhnau, Oliver and Stiewe, Clemens and Muessel, Jarusch and Hirth, Lion}, title = {Natural gas savings in Germany during the 2022 energy crisis}, series = {Nature Energy}, journal = {Nature Energy}, doi = {10.48462/opus4-4944}, url = {http://nbn-resolving.de/urn:nbn:de:kobv:b1570-opus4-49445}, abstract = {Russia curbed its natural gas supply to Europe in 2021 and 2022, creating a grave energy crisis. This paper empirically estimates the crisis response of natural gas consumers in Germany—for decades the largest export market for Russian gas. Using a multiple regression model, we estimate the response of small consumers, industry, and power stations separately, controlling for the non-linear temperature-heating relationship, seasonality, and trends. We find significant and substantial gas savings for all consumer groups, but with differences in timing and size. For instance, industry started reducing consumption as early as September 2021, while small consumers saved substantially only since March 2022. Across all sectors, gas consumption during the second half of 2022 was 23\% below the temperature-adjusted baseline. We discuss the drivers behind these savings and draw conclusions on their role in coping with the crisis.}, language = {en} } @article{JerrentrupLotzTiedemannetal., author = {Jerrentrup, Lars and Lotz, Bastian and Tiedemann, Silvana and Hirth, Lion}, title = {Technology-Neutral Auctions for Renewable Energy: EU Law vs. Member State Reality}, series = {Journal for European Environmental \& Planning Law}, volume = {16}, journal = {Journal for European Environmental \& Planning Law}, edition = {4}, issn = {1876-0104}, doi = {10.1163/18760104-01604005}, url = {http://nbn-resolving.de/urn:nbn:de:kobv:b1570-opus4-30906}, pages = {386 -- 406}, abstract = {European Union competition law, intended to thwart subsidies paid out by national governments, plays an important role in shaping EU Member States' support schemes for renewable energy. The Environmental and Energy State Aid Guidelines 2014-2020, which formalize the European Commission's take on subsidies in the electricity sector, prescribe technology-neutral auctions as the standard mechanism to determine support levels. In this study, we have assessed the formal decisions of the Commission with respect to technology-neutrality between July 2014 and May 2018. It turns out that 16 out of 18 schemes are not technology-neutral and figure high degrees of technology-differentiation. We have also studied the exemption clauses invoked to justify technology-discrimination, finding that the most ambiguous clause is used most frequently, and that the application and level of scrutiny varies strongly from case to case. The State Aid Guidelines are meant to increase transparency and legal certainty. We find that with respect to technology-neutral auctions for renewable energy, the Guidelines fail to deliver on their purpose.}, language = {en} } @article{HirthMuehlenpfordtBulkeley, author = {Hirth, Lion and M{\"u}hlenpfordt, Jonathan and Bulkeley, Marisa}, title = {The ENTSO-E Transparency Platform. An assessment of Europe's most ambitious electricity data platform}, series = {Applied Energy}, volume = {225}, journal = {Applied Energy}, issn = {0306-2619}, doi = {10.1016/j.apenergy.2018.04.048}, url = {http://nbn-resolving.de/urn:nbn:de:kobv:b1570-opus4-28171}, pages = {1054 -- 1067}, abstract = {Applied power system research is data intensive, often requiring hour-by-hour data on electricity consumption and generation as well as detailed information about technical and cost parameters of power stations. The European Union obliges firms to publish much of this information on a common website, the "ENTSO-E Transparency Platform" operated by the association of transmission system operators. It is possibly the most ambitious platform for power system data globally. However, anecdotal evidence from users indicates significant shortcomings regarding data quality and usability. This paper provides an introduction to and an assessment of the Transparency Platform, helping researchers to use it more efficiently and to judge data quality more rigorously.}, language = {en} } @article{Hirth, author = {Hirth, Lion}, title = {The Optimal Share of Variable Renewables: How the Variability of Wind and Solar Power affects their Welfare-optimal Deployment}, series = {The Energy Journal}, volume = {36}, journal = {The Energy Journal}, number = {1}, issn = {1944-9089}, doi = {10.5547/01956574.36.1.6}, url = {http://nbn-resolving.de/urn:nbn:de:kobv:b1570-opus4-22832}, pages = {127 -- 162}, abstract = {This paper estimates the welfare-optimal market share of wind and solar power, explicitly taking into account their output variability. We present a theoretical valuation framework that consistently accounts for the impact of fluctuations over time, forecast errors, and the location of generators in the power grid on the marginal value of electricity from renewables. Then the optimal share of wind and solar power in Northwestern Europe's generation mix is estimated from a calibrated numerical model. We find the optimal long-term wind share to be 20\%, three times more than today; however, we also find significant parameter uncertainty. Variability significantly impacts results: if winds were constant, the optimal share would be 60\%. In addition, the effect of technological change, price shocks, and policies on the optimal share is assessed. We present and explain several surprising findings, including a negative impact of CO2 prices on optimal wind deployment.}, language = {en} } @article{Hirth, author = {Hirth, Lion}, title = {The market value of variable renewables: The effect of solar wind power variability on their relative price}, series = {Energy Economics}, volume = {38}, journal = {Energy Economics}, publisher = {Elsevier B.V.}, issn = {0140-9883}, doi = {10.1016/j.eneco.2013.02.004}, url = {http://nbn-resolving.de/urn:nbn:de:kobv:b1570-opus4-22900}, pages = {218 -- 236}, abstract = {This paper provides a comprehensive discussion of the market value of variable renewable energy (VRE). The inherent variability of wind speeds and solar radiation affects the price that VRE generators receive on the market (market value). During windy and sunny times the additional electricity supply reduces the prices. Because the drop is larger with more installed capacity, the market value of VRE falls with higher penetration rate. This study aims to develop a better understanding on how the market value with penetration, and how policies and prices affect the market value. Quantitative evidence is derived from a review of published studies, regression analysis of market data, and the calibrated model of the European electricity market EMMA. We find the value of wind power to fall from 110\% of the average power price to 50-80\% as wind penetration increases from zero to 30\% of total electricity consumption. For solar power, similarly low value levels are reached already at 15\% penetration. Hence, competitive large-scale renewable deployment will be more difficult to accomplish than as many anticipate.}, language = {en} } @article{PfenningerDeCarolisHirthetal., author = {Pfenninger, Stefan and DeCarolis, Joseph and Hirth, Lion and Quoilin, Sylvain and Staffell, Iain}, title = {The importance of open data and software: Is energy research lagging behind?}, series = {Energy Policy}, volume = {101}, journal = {Energy Policy}, publisher = {Elsevier Ltd}, issn = {0301-4215}, doi = {10.1016/j.enpol.2016.11.046}, url = {http://nbn-resolving.de/urn:nbn:de:kobv:b1570-opus4-22791}, pages = {211 -- 215}, abstract = {Energy policy often builds on insights gained from quantitative energy models and their underlying data. As climate change mitigation and economic concerns drive a sustained transformation of the energy sector, transparent and well-founded analyses are more important than ever. We assert that models and their associated data must be openly available to facilitate higher quality science, greater productivity through less duplicated effort, and a more effective science-policy boundary. There are also valid reasons why data and code are not open: ethical and security concerns, unwanted exposure, additional workload, and institutional or personal inertia. Overall, energy policy research ostensibly lags behind other fields in promoting more open and reproducible science. We take stock of the status quo and propose actionable steps forward for the energy research community to ensure that it can better engage with decision-makers and continues to deliver robust policy advice in a transparent and reproducible way.}, language = {en} } @article{HirthSteckel, author = {Hirth, Lion and Steckel, Jan}, title = {The role of capital costs for decarbonizing the electricity sector}, series = {Environmental Research Letters}, volume = {11}, journal = {Environmental Research Letters}, number = {11}, issn = {1748-9326}, doi = {10.1088/1748-9326/11/11/114010}, url = {http://nbn-resolving.de/urn:nbn:de:kobv:b1570-opus4-22804}, pages = {8}, abstract = {Low-carbon electricity generation, i.e. renewable energy, nuclear power and carbon capture and storage, is more capital intensive than electricity generation through carbon emitting fossil fuel power stations. High capital costs, expressed as high weighted average cost of capital (WACC), thus tend to encourage the use of fossil fuels. To achieve the same degree of decarbonization, countries with high capital costs therefore need to impose a higher price on carbon emissions than countries with low capital costs. This is particularly relevant for developing and emerging economies, where capital costs tend to be higher than in rich countries. In this paper we quantitatively evaluate how high capital costs impact the transformation of the energy system under climate policy, applying a numerical techno-economic model of the power system. We find that high capital costs can significantly reduce the effectiveness of carbon prices: if carbon emissions are priced at USD 50 per ton and the WACC is 3\%, the cost-optimal electricity mix comprises 40\% renewable energy. At the same carbon price and a WACC of 15\%, the cost-optimal mix comprises almost no renewable energy. At 15\% WACC, there is no significant emission mitigation with carbon pricing up to USD 50 per ton, but at 3\% WACC and the same carbon price, emissions are reduced by almost half. These results have implications for climate policy; carbon pricing might need to be combined with policies to reduce capital costs of low-carbon options in order to decarbonize power systems.}, language = {en} } @article{HirthMueller, author = {Hirth, Lion and M{\"u}ller, Simon}, title = {System-friendly wind power: How advanced wind turbine design can increase the economic value of electricity generated through wind power}, series = {Energy Economics}, volume = {56}, journal = {Energy Economics}, publisher = {Elsevier B.V.}, issn = {0140-9883}, doi = {10.1016/j.eneco.2016.02.016}, url = {http://nbn-resolving.de/urn:nbn:de:kobv:b1570-opus4-22819}, pages = {51 -- 63}, abstract = {Previous studies find that the economic value of electricity (USD/MWh) generated by wind power drops with increasing market share. Different measures can help mitigate the value drop, including electricity storage, flexible conventional plants, expansion of transmission, and demand response. This study assesses another option: a change in design of wind power plants. "Advanced" wind turbines that are higher and have a larger rotor compared to rated capacity (lower specific rating) generate electricity more constantly than "classical" turbines. Recent years have witnessed a significant shift towards such advanced technology. Our model-based analysis for Northwestern Europe shows that such design can substantially increase the spot market value of generated electricity. At a 30\% penetration rate, the value of 1 MWh of electricity generated from a fleet of advanced turbines is estimated to be 15\% higher than the value of 1 MWh from classical turbines. The additional value is large, whether compared to wind generation costs, to the value drop, or to the effect of alternative measures such as electricity storage. Extensive sensitivity tests indicate that this finding is remarkably robust. The increase in bulk power value is not the only advantage of advanced turbines: additional benefits might accrue from reduced costs for power grids and balancing services. To fully realize this potential, power markets and support policies need to be appropriately designed and signal scarcity investors.}, language = {en} } @article{HirthUeckerdtEdenhofer, author = {Hirth, Lion and Ueckerdt, Falko and Edenhofer, Ottmar}, title = {Why Wind is not Coal: On the Economics of Electricity Generation}, series = {The Energy Journal}, volume = {37}, journal = {The Energy Journal}, number = {3}, issn = {1944-9089}, doi = {10.5547/01956574.37.3.lhir}, url = {http://nbn-resolving.de/urn:nbn:de:kobv:b1570-opus4-22828}, pages = {1 -- 27}, abstract = {Electricity is a paradoxical economic good: it is highly homogeneous and heterogeneous at the same time. Electricity prices vary dramatically between moments in time, between location, and according to lead-time between contract and delivery. This three-dimensional heterogeneity has implication for the economic assessment of power generation technologies: different technologies, such as coal-fired plants and wind turbines, produce electricity that has, on average, a different economic value. Several tools that are used to evaluate generators in practice ignore these value differences, including "levelized electricity costs", "grid parity", and simple macroeconomic models. This paper provides a rigorous and general discussion of heterogeneity and its implications for the economic assessment of electricity generating technologies. It shows that these tools are biased, specifically, they tend to favor wind and solar power over dispatchable generators where these renewable generators have a high market share. A literature review shows that, at a wind market share of 30-40\%, the value of a megawatt-hour of electricity from a wind turbine can be 20-50\% lower than the value of one megawatt-hour as demanded by consumers. We introduce "System LCOE" as one way of comparing generation technologies economically.}, language = {en} } @article{Hirth, author = {Hirth, Lion}, title = {The Market Value of Solar Power: Is Photovoltaics Cost-Competitive?}, series = {IET Renewable Power Generation}, volume = {9}, journal = {IET Renewable Power Generation}, number = {1}, issn = {1752-1416}, doi = {10.1049/iet-rpg.2014.0101}, url = {http://nbn-resolving.de/urn:nbn:de:kobv:b1570-opus4-22844}, pages = {37 -- 45}, abstract = {This paper reviews the economics of solar power as a source of grid-connected electricity generation. It is widely acknowledged that costs of solar power have declined, but there is disagreement how its economic value should be calculated. 'Grid parity', comparing generation costs to the retail price, is an often used yet flawed metric for economic assessment, as it ignores grid fees, levies, and taxes. It also fails to account for the fact that electricity is more valuable at some points in time and at some locations than that at others. A better yardstick than the retail price is solar power's 'market value'. This paper explains why, and provides empirical estimates of the solar market value from a literature review, German spot market analysis, and the numerical electricity market model EMMA. At low penetration rates (<2-5\%) solar power's market value turns out to be higher than the average wholesale electricity price - mainly, because the sun tends to shine when electricity demand is high. With increasing penetration, the market value declines - the solar premium turns into a solar penalty. In Germany, the value of solar power has fallen from 133\% of the average electricity price to 98\% as solar penetration increased from zero to 4.7\%. This value drop is steeper than wind power's value drop, because solar generation is more concentrated in time. As a consequence, large-scale solar deployment without subsidies will be more difficult to accomplish than many observers have anticipated.}, language = {en} }