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An optimal mix of conventional power systems in the presence of renewable energy: A new design for the German electricity market

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  • Coester, Andreas
  • Hofkes, Marjan W.
  • Papyrakis, Elissaios

Abstract

In this paper we develop a new market design for the German electricity market. Our new market design simultaneously ensures security of energy supply and ongoing expansion of renewable energy (RE). The methodological approach applied considers the special challenges resulting from the intermittent nature of RE ‒ we simulate developments in the German electricity market between 2015 and 2034 and differentiate across various power plant technologies according to their ability to flexibly react to changes in the residual load. In theory, a composition of power plants that is optimally adapted to residual load always leads to the most cost efficient supply of electricity. However, our empirical analysis demonstrates that this does not necessarily lead to an improved market environment, both in terms of power plant profitability as well as uninterrupted power supply.

Suggested Citation

  • Coester, Andreas & Hofkes, Marjan W. & Papyrakis, Elissaios, 2018. "An optimal mix of conventional power systems in the presence of renewable energy: A new design for the German electricity market," Energy Policy, Elsevier, vol. 116(C), pages 312-322.
    • Handle: RePEc:eee:enepol:v:116:y:2018:i:c:p:312-322
    DOI: 10.1016/j.enpol.2018.02.020
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    2. Coester, Andreas & Hofkes, Marjan W. & Papyrakis, Elissaios, 2020. "Economic analysis of batteries: Impact on security of electricity supply and renewable energy expansion in Germany," Applied Energy, Elsevier, vol. 275(C).
    3. Ghassan Zubi & Yael Parag & Shlomo Wald, 2024. "Implications of Large-Scale PV Integration on Grid Operation, Costs, and Emissions: Challenges and Proposed Solutions," Energies, MDPI, vol. 18(1), pages 1-22, December.
    4. Woo, C.K. & Milstein, I. & Tishler, A. & Zarnikau, J., 2019. "A wholesale electricity market design sans missing money and price manipulation," Energy Policy, Elsevier, vol. 134(C).
    5. Machado, Renato Haddad Simões & Rego, Erik Eduardo & Udaeta, Miguel Edgar Morales & Nascimento, Viviane Tavares, 2022. "Estimating the adequacy revenue considering long-term reliability in a renewable power system," Energy, Elsevier, vol. 243(C).
    6. Andreas Coester & Marjan Hofkes & Elissaios Papyrakis, "undated". "Cross-border Electricity Transfers in the case of differentiated Renewable Energy Sources: A Simulation Analysis for Germany and Spain," Tinbergen Institute Discussion Papers 22-043/VIII, Tinbergen Institute.
    7. Coester, Andreas & Hofkes, Marjan W. & Papyrakis, Elissaios, 2018. "Economics of renewable energy expansion and security of supply: A dynamic simulation of the German electricity market," Applied Energy, Elsevier, vol. 231(C), pages 1268-1284.
    8. Nikolaos E. Koltsaklis & Athanasios S. Dagoumas, 2018. "Transmission Expansion and Electricity Trade: A Case Study of the Greek Power System," International Journal of Energy Economics and Policy, Econjournals, vol. 8(5), pages 64-71.
    9. Carlo Bianca, 2022. "On the Modeling of Energy-Multisource Networks by the Thermostatted Kinetic Theory Approach: A Review with Research Perspectives," Energies, MDPI, vol. 15(21), pages 1-22, October.
    10. Aryani, Morteza & Ahmadian, Mohammad & Sheikh-El-Eslami, Mohammad-Kazem, 2021. "Coordination of risk-based generation investments in conventional and renewable capacities in oligopolistic electricity markets: A robust regulatory tool," Energy, Elsevier, vol. 214(C).
    11. Bonilla, Javier & Blanco, Julian & Zarza, Eduardo & Alarcón-Padilla, Diego C., 2022. "Feasibility and practical limits of full decarbonization of the electricity market with renewable energy: Application to the Spanish power sector," Energy, Elsevier, vol. 239(PE).
    12. Anna Kluba & Robert Field, 2019. "Optimization and Exergy Analysis of Nuclear Heat Storage and Recovery," Energies, MDPI, vol. 12(21), pages 1-18, November.
    13. Cao, K.H. & Qi, H.S. & Tsai, C.H. & Woo, C.K. & Zarnikau, J., 2021. "Energy trading efficiency in the US Midcontinent electricity markets," Applied Energy, Elsevier, vol. 302(C).
    14. Takele Ferede Agajie & Armand Fopah-Lele & Ahmed Ali & Isaac Amoussou & Baseem Khan & Mahmoud Elsisi & Wirnkar Basil Nsanyuy & Om Prakash Mahela & Roberto Marcelo Álvarez & Emmanuel Tanyi, 2023. "Integration of Superconducting Magnetic Energy Storage for Fast-Response Storage in a Hybrid Solar PV-Biogas with Pumped-Hydro Energy Storage Power Plant," Sustainability, MDPI, vol. 15(13), pages 1-30, July.
    15. Paul Ghelasi & Florian Ziel, 2025. "A data-driven merit order: Learning a fundamental electricity price model," Papers 2501.02963, arXiv.org.
    16. Sorknæs, P. & Lund, Henrik & Skov, I.R. & Djørup, S. & Skytte, K. & Morthorst, P.E. & Fausto, F., 2020. "Smart Energy Markets - Future electricity, gas and heating markets," Renewable and Sustainable Energy Reviews, Elsevier, vol. 119(C).

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