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Design of regional flexibility markets for electricity: A product classification framework for and application to German pilot projects

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  • Heilmann, Erik
  • Klempp, Nikolai
  • Wetzel, Heike

Abstract

With the growing role of distributed energy resources, the electricity network is challenged by numerous technical problems, such as capacity congestion and over- or under-voltage. An often-discussed response, especially in the European zonal electricity system, is to implement regional flexibility markets. We contribute to this discussion by providing a comprehensive classification framework for the design of flexibility products by combining technical requirements with classical auction theory. The framework structures 23 product parameters in four stages of abstraction. By applying the framework to five market approaches used in current German research projects, we demonstrate its usefulness for consistent comparison of flexibility products at a high level of detail. This framework can empower national and international policymakers and practitioners in assessing flexibility markets holistically, thereby facilitating the implementation of sound solutions.

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  • Heilmann, Erik & Klempp, Nikolai & Wetzel, Heike, 2020. "Design of regional flexibility markets for electricity: A product classification framework for and application to German pilot projects," Utilities Policy, Elsevier, vol. 67(C).
    • Handle: RePEc:eee:juipol:v:67:y:2020:i:c:s0957178720301272
    DOI: 10.1016/j.jup.2020.101133
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    References listed on IDEAS

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    Cited by:

    1. Rebenaque, Olivier & Schmitt, Carlo & Schumann, Klemens & Dronne, Théo & Roques, Fabien, 2023. "Success of local flexibility market implementation: A review of current projects," Utilities Policy, Elsevier, vol. 80(C).
    2. Olivier Rebenaque & Carlo Schmitt & Klemens Schumann, 2022. "Trading in local markets: A review of concepts and challenges," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2022(2), pages 25-47.
    3. Loisel, Rodica & Lemiale, Lionel & Mima, Silvana & Bidaud, Adrien, 2022. "Strategies for short-term intermittency in long-term prospective scenarios in the French power system," Energy Policy, Elsevier, vol. 169(C).
    4. Erik Heilmann & Nikolai Klempp & Kai Hufendiek & Heike Wetzel, 2022. "Long-term Contracts for Network-supportive Flexibility in Local Flexibility Markets," MAGKS Papers on Economics 202224, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    5. Rodica Loisel & Lionel Lemiale & Silvana Mima & Adrien Bidaud, 2022. "Strategies for short-term intermittency in long-term prospective scenarios in the French power system," Post-Print hal-04568072, HAL.
    6. Chun Xia-Bauer & Florin Vondung & Stefan Thomas & Raphael Moser, 2022. "Business Model Innovations for Renewable Energy Prosumer Development in Germany," Sustainability, MDPI, vol. 14(13), pages 1-17, June.
    7. Ajla Mehinovic & Matej Zajc & Nermin Suljanovic, 2023. "Interpretation and Quantification of the Flexibility Sources Location on the Flexibility Service in the Distribution Grid," Energies, MDPI, vol. 16(2), pages 1-18, January.
    8. Heilmann, Erik, 2023. "The impact of transparency policies on local flexibility markets in electric distribution networks," Utilities Policy, Elsevier, vol. 83(C).
    9. Carlo Schmitt & Felix Gaumnitz & Andreas Blank & Olivier Rebenaque & Théo Dronne & Arnault Martin & Philippe Vassilopoulos & Albert Moser & Fabien Roques, 2021. "Framework for Deterministic Assessment of Risk-Averse Participation in Local Flexibility Markets †," Energies, MDPI, vol. 14(11), pages 1-34, May.
    10. Tomasz Ząbkowski & Krzysztof Gajowniczek & Grzegorz Matejko & Jacek Brożyna & Grzegorz Mentel & Małgorzata Charytanowicz & Jolanta Jarnicka & Anna Olwert & Weronika Radziszewska & Jörg Verstraete, 2023. "Cluster-Based Approach to Estimate Demand in the Polish Power System Using Commercial Customers’ Data," Energies, MDPI, vol. 16(24), pages 1-21, December.
    11. Kara, Güray & Tomasgard, Asgeir & Farahmand, Hossein, 2022. "Characterizing flexibility in power markets and systems," Utilities Policy, Elsevier, vol. 75(C).
    12. Bender, Jonas & Fait, Larissa & Wetzel, Heike, 2024. "Acceptance of demand-side flexibility in the residential heating sector — Evidence from a stated choice experiment in Germany," Energy Policy, Elsevier, vol. 191(C).
    13. Amra Jahic & Felix Heider & Maik Plenz & Detlef Schulz, 2022. "Flexibility Quantification and the Potential for Its Usage in the Case of Electric Bus Depots with Unidirectional Charging," Energies, MDPI, vol. 15(10), pages 1-18, May.
    14. Erik Heilmann, 2021. "The impact of transparency policies on local flexibility markets in electrical distribution networks: A case study with artificial neural network forecasts," MAGKS Papers on Economics 202141, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    15. Bellenbaum, Julia & Höckner, Jonas & Weber, Christoph, 2022. "Designing flexibility procurement markets for congestion management – investigating two-stage procurement auctions," Energy Economics, Elsevier, vol. 106(C).
    16. Potenciano Menci, Sergio & Valarezo, Orlando, 2024. "Decoding design characteristics of local flexibility markets for congestion management with a multi-layered taxonomy," Applied Energy, Elsevier, vol. 357(C).

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    More about this item

    Keywords

    Smart markets; Market design; Electricity product design; Flexibility market;
    All these keywords.

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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