@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{HirthKhannaRuhnau, author = {Hirth, Lion and Khanna, Tarun M. and Ruhnau, Oliver}, title = {How aggregate electricity demand responds to hourly wholesale price fluctuations}, series = {Energy Economics}, volume = {135}, journal = {Energy Economics}, publisher = {Elsevier BV}, issn = {0140-9883}, doi = {10.1016/j.eneco.2024.107652}, abstract = {Electricity needs to be consumed at the very moment of production, leading wholesale prices to fluctuate widely at (sub-)hourly time scales. This article investigates the response of aggregate electricity demand to such price variations. Using wind energy as an instrument, we estimate a significant and robust short-term price elasticity of about -0.05 in Germany and attribute this to industrial consumers. As the share of consumption that is exposed to real-time prices (currently less than 25\%) expands, we expect the aggregated price elasticity to grow.}, language = {en} } @article{SchlechtMaurerHirth, author = {Schlecht, Ingmar and Maurer, Christoph and Hirth, Lion}, title = {Financial contracts for differences: The problems with conventional CfDs in electricity markets and how forward contracts can help solve them}, series = {Energy Policy}, volume = {186}, journal = {Energy Policy}, doi = {10.1016/j.enpol.2024.113981}, abstract = {Contracts for differences are widely seen as a cornerstone of Europe's future electricity market design. This paper is about designing such contracts. We identify the dispatch and investment distortions that conventional CfDs cause, the patches used to overcome these shortcomings, and the problems these fixes introduce. We then propose an alternative contract we call "financial" CfD. This hybrid between conventional CfDs and forward contracts mitigates revenue risk to a substantial degree while providing undistorted incentives. Like conventional CfDs, it is long-term and tailored to technology-specific (wind, solar, nuclear) generation patterns but, like forwards, decouples payments from actual generation. The proposed contract mitigates volume risk and avoids margin calls by accepting physical assets as collateral.}, language = {en} } @article{WinzerRamirezMolinaHirthetal., author = {Winzer, Christian and Ram{\´i}rez-Molina, H{\´e}ctor and Hirth, Lion and Schlecht, Ingmar}, title = {Profile contracts for electricity retail customers}, series = {Energy Policy}, volume = {195}, journal = {Energy Policy}, publisher = {Elsevier BV}, issn = {0301-4215}, doi = {10.1016/j.enpol.2024.114358}, abstract = {Decarbonization involves a large-scale expansion of low-carbon generators such as wind and solar and the electrification of heating and transport. Both space heating and battery-electric cars have significant embedded flexibility potential. Granular price signals that convey abundance or scarcity of electricity are a precondition for customers or aggregators acting on their behalf to exploit this flexibility. However, unmitigated real-time prices expose customers to electricity price risks. To tackle the dual need of providing flexibility incentives while protecting customers from cost shocks, real-time tariffs with a hedging component can be a solution. In such contracts customers pre-agree an amount of energy and a consumption profile, while hourly deviations are charged at spot prices. In this paper we analyze design options by using a dataset of anonymized smart meter data and show that profile tariffs can bring electricity bill volatility to similarly low levels as fixed tariffs while providing full flexibility incentives from spot prices.}, language = {en} } @article{EhrhartEickeHirthetal., author = {Ehrhart, Karl-Martin and Eicke, Anselm and Hirth, Lion and Ocker, Fabian and Ott, Marion and Schlecht, Ingmar and Wang, Runxi}, title = {Analysis of a capacity-based redispatch mechanism}, series = {Energy Economics}, volume = {149}, journal = {Energy Economics}, publisher = {Elsevier BV}, doi = {10.1016/j.eneco.2025.108751}, abstract = {This paper discusses a capacity-based redispatch mechanism in which awarded market participants are compensated for their availability for redispatch, rather than activation. The rationale is to develop a market design that prevents so-called "inc-dec gaming" when including flexible consumers with a market-based approach. We conduct a game-theoretical analysis of a capacity-based redispatch mechanism. Our analysis reveals that despite its intention, the capacity-based redispatch is prone to undesirable behavior of market participants. The reason is that the availability payment incentivizes participants to change their energy consumption or generation behavior. However, this also applies to undesired participants who increase the redispatch requirement through participation. Under certain assumptions, the additional redispatch potential equals the additional redispatch requirement it creates. Consequently, the mechanism does not resolve network constraints, while causing costs for the compensation payments. Furthermore, we study three alternative implementation options, none of which resolves the underlying problem. It follows from our analysis that a mechanism can only be promising if it is capable to distinguish between the potential participants to exclude the undesired ones.}, language = {en} } @article{StieweXuEickeetal., author = {Stiewe, Clemens and Xu, Alice Lixuan and Eicke, Anselm and Hirth, Lion}, title = {Cross-border cannibalization: Spillover effects of wind and solar energy on interconnected European electricity markets}, series = {Energy Economics}, volume = {143}, journal = {Energy Economics}, publisher = {Elsevier BV}, issn = {0140-9883}, doi = {10.1016/j.eneco.2025.108251}, abstract = {The average per-MWh revenue, or market value, of wind and solar energy tends to fall with increasing market share, as is now evident across European electricity markets. At the same time, these markets are becoming more interconnected. In this paper, we empirically study cross-border effects on the value of renewable energy: On one hand, interconnection is a flexibility resource that allows to export energy when it is locally abundant, benefitting renewables. On the other hand, wind and solar patterns are correlated between countries, so neighboring supply adds to the local one to depress domestic prices. We estimate both effects, using spatial panel regression on electricity market data from 2015 to 2023 from 30 European bidding zones. We find that domestic wind and solar value is not only depressed by domestic, but also by neighboring renewables expansion. The better interconnected a market is, the smaller the effect of domestic but the larger the effect of neighboring renewables. While wind value is stabilized by interconnection, the data suggest that solar value is not. These results can be used to estimate the impact of simultaneous domestic and neighboring capacity expansion: If wind market share increases both at home and in neighboring markets by one percentage point, the value factor of wind energy is reduced by just above 1 percentage point. For solar, this number is almost 4 percentage points.}, language = {en} } @article{EhrhartEickeHirthetal., author = {Ehrhart, Karl-Martin and Eicke, Anselm and Hirth, Lion and Ocker, Fabian and Ott, Marion and Schlecht, Ingmar and Wang, Runxi}, title = {Congestion Management Games in Electricity Markets}, series = {The Energy Journal}, volume = {47}, journal = {The Energy Journal}, number = {1}, doi = {10.1177/01956574251365606}, pages = {77 -- 108}, abstract = {This paper proposes a game-theoretic model to analyze the strategic behavior of inc-dec gaming in market-based congestion management (redispatch). We extend existing models by considering incomplete information about competitors' costs and a finite set of providers. We find that these extensions do not dissolve inc-dec gaming, which already occurs in our setup of two regions. We also benchmark market-based redispatch against grid investment, cost-based redispatch, and the Vickrey-Clarke-Groves mechanism. The comparison highlights a significant inefficiency of market-based redispatch and inflated redispatch payments. Finally, we study seven variations of our basic model to assess whether different market fundamentals or market design changes mitigate inc-dec gaming. None of these variations eliminate inc-dec gaming entirely.}, language = {en} }