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This chapter discusses trading in the day-ahead and intraday electricity markets, first in general and then from the perspectives of renewable power generators and demand response, respectively. This includes an overview of the relevant literature, a theoretical framework, and illustrative quantitative examples. The uncertainty of renewable electricity supply drives price volatility, especially in the intraday market, and leads to balancing cost for renewables, which can be optimized through forecasting and trading. The increased intraday price volatility can be exploited and moderated by demand response, which thereby helps to balance the uncertainty of renewables.
Carbon pricing is widely considered a key policy instrument for achieving substantial climate change mitigation. However, implementation remains patchy and price levels vary significantly across countries and regions. In this article, we analyze the structural social, political, and economic conditions under which carbon prices have been implemented so far. We estimate a Tobit regression model to investigate variations in explicit carbon prices over 262 national and subnational jurisdictions. Our results highlight well-governed institutions and public attitudes as the most important conditions for carbon pricing and characterize fossil fuel consumption as a barrier to the implementation of carbon prices. The results suggest that governance and public attitude need to be integrated into political economy analysis. Policy makers should take regulatory capacities and public attitudes seriously when designing carbon pricing policies.
The development of European power markets is highly influenced by integrated electricity and heat systems. Therefore, decarbonization policies for the electricity and heat sectors, as well as numerical models that are used to guide such policies, should consider cross-sectoral interdependencies. However, although many model-based policy assessments for the highly interconnected European electricity system exist, international studies that consider interactions with the heat sector are rare. In this contribution, we systematically study the potential benefits of integrated heat and power systems by conducting a model comparison experiment. Five large-scale market models covering electricity and heat supply were utilized to study the interactions between a rather simple coal replacement scenario and a more ambitious policy that supports decarbonization through power-to-heat. With a focus on flexibility provision, emissions reduction, and economic efficiency, although the models agree on the qualitative effects, there are considerable quantitative differences. For example, the estimated reductions in overall CO2 emissions range between 0.2 and 9.0 MtCO2/a for a coal replacement scenario and between 0.2 and 25.0 MtCO2/a for a power-to-heat scenario. Model differences can be attributed mainly to the level of detail of CHP modeling and the endogeneity of generation investments. Based on a detailed comparison of the modeling results, implications for modeling choices and political decisions are discussed.
Klimaschutz und Verkehr: Zielerreichung nur mit unbequemen Maßnahmen möglich. Ariadne-Analyse
(2021)
Die Klimaschutzziele für das Jahr 2030 sind im Verkehrssektor nur mit starken zusätzlichen Treibhausgasreduktionen erreichbar. Die beschlossenen Maßnahmen können laut gegenwärtigen Projektionen nur einen Bruchteil jener Emissionen reduzieren, welche für die Erreichung der Klimaschutzziele im Verkehrssektor notwendig wären. Um die politische Umsetzbarkeit zusätzlicher Klimaschutzmaßnahmen zu erörtern, analysieren wir die Emissionsminderungswirkung und die Bevölkerungsakzeptanz von 14 möglichen Maßnahmen, basierend auf Drittstudien und eigenen Erhebungen. Wir zeigen, dass die wirkungsstärksten Maßnahmen tendenziell eine geringe Zustimmung in der Bevölkerung erfahren, wobei die Lastenverteilung keinen sichtbaren Einfluss auf die Bevölkerungsakzeptanz hat. Maßnahmen, die in der Bevölkerung mehrheitlich unterstützt werden, führen nach gegenwärtigen Projektionen nur zu geringen Treibhausgasreduktionen, so dass die Erreichung der Klimaziele 2030 ohne kontroverse Maßnahmen wie höhere CO2-Preise oder einer flächendeckenden Maut unwahrscheinlich ist. Um die Befürwortung von gegenwärtig kontroversen Maßnahmen zu erhöhen, ist es notwendig, sichtbare Rückverteilungsmechanismen zu etablieren, Maßnahmen durch gruppenspezifische Kommunikation zu begleiten und die Einführung von Politikinstrumenten strategisch zu sequenzieren.
Von der Sektorkopplung bis zum Wasserstoff, von der Umsetzung des Klimaschutzgesetzes bis hin zum europäischen Green Deal: Um Klimaneutralität zu erreichen, braucht es eine koordinierte und effektive Politiksteuerung über einzelne Ressorts hinweg. Klimapolitik ist Querschnittsaufgabe, denn von der Stromerzeugung über Industrie, Gebäude und Verkehr bis hin zur Landwirtschaft müssen alle Sektoren mit hohem Tempo treibhausgasneutral werden. Fachleute des vom Bundesministerium für Bildung und Forschung BMBF geförderten Kopernikus-Projekts Ariadne haben zentrale Probleme der staatlichen Steuerung deutscher Klimapolitik untersucht und Lösungsoptionen vorgelegt.
Frequency stability requires equalizing supply and demand for electricity at short time scales. Such electricity balancing is often understood as a sequential process in which random shocks, such as weather events, cause imbalances that system operators close by activating balancing reserves. By contrast, we study electricity balancing as a market where the equilibrium price (imbalance price) and quantity (system imbalance) are determined by supply and demand. System operators supply imbalance energy by activating reserves; market parties that, deliberately or not, deviate from schedules create a demand for imbalance energy. The incentives for deliberate strategic deviations emerge from wholesale market prices and the imbalance price. We empirically estimate the demand curve of imbalance energy, which describes how sensitive market parties are to imbalance prices. To overcome the classical endogeneity problem of price and quantity, we deploy instruments derived from a novel theoretical framework. Using data from Germany, we find a decline in the demand for imbalance energy by 2.2 MW for each increase in the imbalance price by EUR 1 per MWh. This significant price response is remarkable because the German regulator prohibits strategic deviations. We also estimate cross-market equilibriums between intraday and imbalance markets, finding that a shock to the imbalance price triggers a subsequent adjustment of the intraday price.
The hydrogen economy is currently experiencing a surge in attention, partly due to the possibility of absorbing wind and solar energy production peaks through electrolysis. A fundamental challenge with this approach is low utilization rates of various parts of the integrated electricity-hydrogen system. To assess the importance of capacity utilization, this paper introduces a novel stylized numerical energy system model incorporating the major elements of electricity and hydrogen generation, transmission and storage, including both "green" hydrogen from electrolysis and "blue" hydrogen from natural gas reforming with CO2 capture and storage (CCS). Balancing renewables with electrolysis results in low utilization of electrolyzers, hydrogen pipelines and storage infrastructure, or electricity transmission networks, depending on whether electrolyzers are co-located with wind farms or demand centers. Blue hydrogen scenarios face similar constraints. High renewable shares impose low utilization rates of CO2 capture, transport and storage infrastructure for conventional CCS, and of hydrogen transmission and storage infrastructure for a novel process (gas switching reforming) that enables flexible power and hydrogen production. In conclusion, both green and blue hydrogen can facilitate the integration of wind and solar energy, but the cost related to low capacity utilization erodes much of the expected economic benefit.
Wind and solar energy are often expected to fall victim to their own success: the higher their share in electricity production, the more their revenue on electricity markets (their “market value”) declines. While in conventional power systems, the market value may converge to zero, this study demonstrates that “green” hydrogen production, through adding electricity demand in low-price hours, can effectively and permanently halt the decline. With an analytical derivation, a Monte Carlo simulation, and a numerical electricity market model, I find that – due to flexible hydrogen production alone – market values across Europe likely converge above €19 ± 9 MWh-1 for solar energy and above €27 ± 8 MWh-1 for wind energy in 2050 (annual mean estimate ± standard deviation). This lower boundary is in the range of the projected levelized costs of renewables and has profound implications. Market-based renewables may hence be within reach. simulation, and a numerical electricity market model, I find that – due to flexible hydrogen production alone – market values across Europe likely converge above €19 ± 9 MWh-1 for solar energy and above €27 ± 8 MWh-1 for wind energy in 2050 (annual mean estimate ± standard deviation). This lower boundary is in the range of the projected levelized costs of renewables and has profound implications. Market-based renewables may hence be within reach.
Climate target achievement has a crucial influence on the modelling and the decision processes in the energy sector. It induced the development of several policy instruments to mitigate greenhouse gas emissions, including administrative and market-based mechanisms for phasing out coal-fired generation technologies. In order to analyse such instruments, electricity market and energy system models are widely used. However, results and corresponding recommendations largely depend on the formulation of the respective model. This motivates a systematic comparison of five large-scale electricity market models which are applied to European scenarios considering the period until 2030. An evolved diff-in-diff approach is proposed to analyse the effects of two coal phase-out strategies. This contribution expands on that of earlier studies and provides some more general takeaways for both modellers and decision-makers. For instance, the evolved diff-in-diff analysis shows the influence of the reference scenario when evaluating a policy instrument. Furthermore, the importance of technical aspects such as constraints for combined heat and power plants are discussed and implications regarding three dimensions (economic, environmental, and security of supply) are presented.