TY - RPRT A1 - Tiedemann, Silvana A1 - Sgarlato, Raffaele A1 - Hirth, Lion T1 - Price elasticity of electricity demand: Using instrumental variable regressions to address endogeneity and autocorrelation of high-frequency time series N2 - This paper examines empirical methods for estimating the response of aggregated electricity demand to high-frequency price signals, the short-term elasticity of electricity demand. We investigate how the endogeneity of prices and the autocorrelation of the time series, which are particularly pronounced at hourly granularity, affect and distort common estimators. After developing a controlled test environment with synthetic data that replicate key statistical properties of electricity demand, we show that not only the ordinary least square (OLS) estimator is inconsistent (due to simultaneity), but so is a regular instrumental variable (IV) regression (due to autocorrelation). Using wind as an instrument, as it is commonly done, may result in an estimate of the demand elasticity that is inflated by an order of magnitude. We visualize the reason for the Thams bias using causal graphs and show that its magnitude depends on the autocorrelation of both the instrument, and the dependent variable. We further incorporate and adapt two extensions of the IV estimation, conditional IV and nuisance IV, which have recently been proposed by Thams et al. (2022). We show that these extensions can identify the true short-term elasticity in a synthetic setting and are thus particularly promising for future empirical research in this field. Y1 - 2023 U6 - https://doi.org/10.48550/arXiv.2306.12863 PB - arXiv ER - TY - RPRT A1 - Sánchez Canales, Jorge A1 - Xu, Alice Lixuan A1 - Fusar Bassini, Chiara A1 - Kaack, Lynn H. A1 - Hirth, Lion T1 - An empirical estimate of the electricity supply curve from market outcomes N2 - Researchers and electricity sector practitioners frequently require the supply curve of electricity markets and the price elasticity of supply for purposes such as price forecasting, policy analyses or market power assessment. It is common practice to construct supply curves from engineering data such as installed capacity and fuel prices. In this study, we propose a data-driven methodology to estimate the supply curve of electricity market empirically, i.e. from observed prices and quantities without further modeling assumptions. Due to the massive swings in fuel prices during the European energy crisis, a central task is detecting periods of stable supply curves. To this end, we implement two alternative clustering methods, one based on the fundamental drivers of electricity supply and the other directly on observed market outcomes. We apply our methods to the German electricity market between 2019 and 2024. We find that both approaches identify almost identical regimes shifts, supporting the idea of stable supply regimes stemming from stable drivers. Supply conditions are often stable for extended periods, but evolved rapidly during the energy crisis, triggering a rapid succession of regimes. Fuel prices were the dominant drivers of regime shifts, while conventional plant availability and the nuclear phase-out play a comparatively minor role. Our approach produces empirical supply curves suitable for causal inference and counterfactual analysis of market outcomes. Y1 - 2025 U6 - https://doi.org/10.48550/arXiv.2511.23068 PB - arXiv ER - TY - JOUR A1 - Dertinger, Andrea A1 - Hirth, Lion T1 - Reforming the electric power industry in developing economies: Evidence on efficiency and electricity access outcomes JF - Energy Policy N2 - Since the 1990s, many developing countries have restructured their electric power industry. Policies such as breaking up, commercializing and privatizing utilities, allowing for independent power producers, installing independent regulators, and introducing competitive wholesale markets were meant to improve the industry's efficiency and service quality. We exploit more than 30 years of data from over 100 countries to investigate the impact of power sector reforms on efficiency (represented by network losses) and access to electricity (represented by connection rates and residential power consumption). Crucially, reforms are likely to be endogenous with respect to sector performance: a crisis in electricity supply might well trigger reform efforts. We deal with endogeneity using reform activity in neighboring countries as an instrument. Our results suggest that reforms strongly and positively impact electricity access. According to our preferred specification, a full reform program would increase connection rates by 20 percentage points and per capita consumption by 62 percent: these are large effects that are stable across a range of robustness checks. Moreover, the effect of improving access is largest in South Asian countries. In contrast to previous studies, we do not find robust evidence to support the theory that reforms reduce network losses. Y1 - 2020 U6 - https://doi.org/10.1016/j.enpol.2020.111348 IS - 139 ER - TY - JOUR A1 - Hirth, Lion T1 - Open Data for Electricity Modeling: Legal Aspects JF - Energy Strategy Reviews N2 - Power system modeling is data intensive. In Europe, electricity system data is often available from sources such as statistical offices or system operators. However, it is often unclear if these data can be legally used for modeling, and in particular if such use infringes intellectual property rights. This article reviews the legal status of power system data, both as a guide for data users and for data publishers. It is based on interpretation of the law, a review of the secondary literature, an analysis of the licenses used by major data distributors, expert interviews, and a series of workshops. A core finding is that in many cases the legality of current practices is doubtful: in fact, it seems likely that modelers infringe intellectual property rights quite regularly. This is true for industry analysis but also academic researchers. A straightforward solution is open data – the idea that data can be freely used, modified, and shared by anyone for any purpose. To be open, it is not sufficient for data to be accessible free of cost, it must also come with an open data license, the most common types of which are also reviewed in this paper. Y1 - 2020 U6 - https://doi.org/10.1016/j.esr.2019.100433 IS - 27 ER - TY - JOUR A1 - Cloete, Schalk A1 - Hirth, Lion T1 - Flexible power and hydrogen production: Finding synergy between CCS and variable renewables JF - Energy N2 - The expansion of wind and solar power is creating a growing need for power system flexibility. Dispatchable power plants with CO2 capture and storage (CCS) offer flexibility with low CO2 emissions, but these plants become uneconomical at the low running hours implied by renewables-based power systems. To address this challenge, the novel gas switching reforming (GSR) plant was recently proposed. GSR can alternate between electricity and hydrogen production from natural gas, offering flexibility to the power system without reducing the utilization rate of the capital stock embodied in CCS infrastructure. This study assesses the interplay between GSR and variable renewables using a power system model, which optimizes investment and hourly dispatch of 13 different technologies. Results show that GSR brings substantial benefits relative to conventional CCS. At a CO2 price of €100/ton, inclusion of GSR increases the optimal wind and solar share by 50%, lowers total system costs by 8%, and reduces system emissions from 45 to 4 kgCO2/MWh. In addition, GSR produces clean hydrogen equivalent to about 90% of total electricity demand, which can be used to decarbonize transport and industry. GSR could therefore become a key enabling technology for a decarbonization effort led by wind and solar power. Y1 - 2020 U6 - https://doi.org/10.1016/j.energy.2019.116671 VL - 192 ER - TY - JOUR A1 - Khanna, Tarun A1 - Baiocchi, Giovanni A1 - Callaghan, Max A1 - Creutzig, Felix A1 - Guias, Horia A1 - Haddaway, Neal R. A1 - Hirth, Lion A1 - Javaid, Aneeque A1 - Koch, Nicolas A1 - Laukemper, Sonja A1 - Löschel, Andreas A1 - del Mar Zamora Dominguez, Maria A1 - Minx, Jan C. T1 - A multi-country meta-analysis on the role of behavioural change in reducing energy consumption and CO2 emissions in residential buildings JF - Nature Energy N2 - Despite the importance of evaluating all mitigation options to inform policy decisions addressing climate change, a comprehensive analysis of household-scale interventions and their emissions reduction potential is missing. Here, we address this gap for interventions aimed at changing individual households’ use of existing equipment, such as monetary incentives or feedback. We have performed a machine learning-assisted systematic review and meta-analysis to comparatively assess the effectiveness of these interventions in reducing energy demand in residential buildings. We extracted 360 individual effect sizes from 122 studies representing trials in 25 countries. Our meta-regression confirms that both monetary and non-monetary interventions reduce the energy consumption of households, but monetary incentives, of the sizes reported in the literature, tend to show on average a more pronounced effect. Deploying the right combinations of interventions increases the overall effectiveness. We have estimated a global carbon emissions reduction potential of 0.35 GtCO2 yr−1, although deploying the most effective packages of interventions could result in greater reduction. While modest, this potential should be viewed in conjunction with the need for de-risking mitigation pathways with energy-demand reductions. Y1 - 2021 U6 - https://doi.org/10.1038/s41560-021-00866-x VL - 6 SP - 925 EP - 932 ER - TY - RPRT A1 - Ruhnau, Oliver A1 - Stiewe, Clemens A1 - Muessel, Jarusch A1 - Hirth, Lion T1 - Gas demand in times of crisis. The response of German households and industry to the 2021/22 energy crisis N2 - Europe is in the midst of the most severe energy crisis in a generation, at the core of which is the continuously plummeting supply of Russian natural gas. With alternative supply options being limited, natural gas prices have surged. This paper empirically estimates the response of natural gas demand to the price increase, using data from Germany—the so far largest consumer of Russian natural gas. We identify the crisis response of small and large consumers separately, controlling for temperature, gas-fired power generation, and economic activity. For small consumers, including mostly households, we find a substantial demand reduction of 6% from March onwards—most likely due to political and ethical considerations after the start of Russia’s invasion of Ukraine. For industrial consumers, demand reductions started much earlier in August 2021, when wholesale prices for natural gas started to surge, with an average reduction of 11%. We conclude that voluntary industrial demand response has played a significant role in coping with the energy crisis so far. KW - Energy Demand KW - Demand Response KW - European energy crisis KW - Natural gas KW - Centre for Sustainability Y1 - 2022 ER - TY - RPRT A1 - Tiedemann, Silvana A1 - Stiewe, Clemens A1 - Kratzke, Corinna A1 - Hirth, Lion A1 - Jentsch, Mareike A1 - Damm, Nicolai A1 - Gerhardt, Norman A1 - Pape, Carsten T1 - Gebotszonenteilung: Auswirkungen auf den Marktwert der Erneuerbaren Energien im Jahr 2030 N2 - Eine Teilung des deutschen Marktgebietes würde die Marktwerte erneuerbarer Energien beeinflussen. Wind und Photovoltaik (PV) im Süden Deutschlands würden an Wert gewinnen, während Erneuerbare im Norden Erlöse einbüßen würden. Bei einer auch zukünftig stärkeren Konzentration von erneuerbaren Energien im Norden bedeutet dies insgesamt einen höheren Förderbedarf für PV – Wind wäre trotz niedriger Marktwerte in den meisten Regionen wirtschaftlich. Wenn eine regionale Steuerung erreicht werden soll, müsste die auszuzahlende Förderung für neue PV-Anlagen anhand des zonenübergreifenden Referenzmarktwertes berechnet werden. Durchschnittliche Börsenstrompreise würden durch eine Gebotszonenteilung im Süden Deutschlands leicht angehoben und im Norden gesenkt, die Effekte auf Endkundenpreise und damit verbundene Anreize zur Standortwahl von Industrieunternehmen sind allerdings als gering einzuschätzen. KW - ARIADNE Y1 - 2024 UR - https://ariadneprojekt.de/publikation/gebotszonenteilung-auswirkungen-auf-den-marktwert-der-erneuerbaren-energien-im-jahr-2030/ U6 - https://doi.org/10.48485/pik.2024.002 PB - Kopernikus-Projekt Ariadne CY - Potsdam ER - TY - RPRT A1 - Stiewe, Clemens A1 - Xu, Alice Lixuan A1 - Eicke, Anselm A1 - Hirth, Lion T1 - Cross-border cannibalization: Spillover effects of wind and solar energy on interconnected European electricity markets N2 - The average revenue, or market value, of wind and solar energy tends to fall with increasing market shares, as is now evident across European electricity markets. At the same time, these markets have become more interconnected. In this paper, we empirically study the multiple 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 radiation are correlated across space, 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, solar value is not. 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 points. For solar, this number is almost 4 percentage points. Y1 - 2024 U6 - https://doi.org/10.48550/arXiv.2405.17166 PB - arXiv ER - TY - JOUR A1 - Stiewe, Clemens A1 - Xu, Alice Lixuan A1 - Eicke, Anselm A1 - Hirth, Lion T1 - Cross-border cannibalization: Spillover effects of wind and solar energy on interconnected European electricity markets JF - Energy Economics N2 - 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. Y1 - 2025 U6 - https://doi.org/10.1016/j.eneco.2025.108251 SN - 0140-9883 N1 - Open Access publication is funded by the Hertie School Library VL - 143 PB - Elsevier BV ER - TY - RPRT A1 - Hirth, Lion A1 - Tiedemann, Silvana A1 - Schill, Wolf-Peter T1 - Was sind eigentlich Netzentgelte? Y1 - 2024 UR - https://ariadneprojekt.de/publikation/hintergrund-was-sind-eigentlich-netzentgelte/ U6 - https://doi.org/10.48485/pik.2024.020 PB - Kopernikus-Projekt Ariadne CY - Potsdam ER - TY - JOUR A1 - Ehrhart, Karl-Martin A1 - Eicke, Anselm A1 - Hirth, Lion A1 - Ocker, Fabian A1 - Ott, Marion A1 - Schlecht, Ingmar A1 - Wang, Runxi T1 - Congestion Management Games in Electricity Markets JF - The Energy Journal N2 - 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. Y1 - 2026 U6 - https://doi.org/10.1177/01956574251365606 VL - 47 IS - 1 SP - 77 EP - 108 ER -