News – Bremen Energy Research

26/07/2024
Bremen Energy Working Papers No. 48
PTSO Coordination and Strategic Behaviour: A Game Theoretical and Simulation Model Study based on the German Electricity Grid
Franziska Flachsbarth, Anna Pechan, Martin Palovic, Matthias Koch, Dierk Bauknecht & Gert Brunekreeft
Abstract: The electricity grid includes multiple network areas managed by different operators, with transmission system operators (TSOs) handling high-voltage areas and distribution system operators managing mid- to low-voltage areas. These areas are interconnected and synchronized, creating classical external effects where one operator's actions impact others. Recently, high voltage direct current (HVDC) lines have been introduced, offering operators greater flexibility and control over power flows compared to conventional alternating current (AC) lines, thereby reducing congestion and losses. However, HVDC lines can significantly affect neighbouring grids, potentially leading to strategic behaviour by network operators.
This paper examines the strategic use of HVDC lines, using a model-based approach on projected 2030 market data in the German electricity system. It finds that without explicit coordination mechanisms most hours result in incentives for non-cooperative outcomes, with only three hours within one year showing incentives for a cooperative outcome. Despite lower overall system costs with cooperation, asymmetric distribution of cooperation benefits prevents long-term cooperation. Thus, cost-revenue- sharing schemes are needed to promote cooperation and balance benefits.

13/06/2024
Bremen Energy Working Papers No. 47
Policy measures to apply the Whole System Approach (WSA) in energy infrastructures
Gert Brunekreeft, Dierk Bauknecht, Martin Palovic, Anna Pechan, Franziska Flachsbarth, Matthias Koch
Abstract: Following liberalization and especially the energy transition, energy infrastructures are developing rapidly and significantly. Electricity networks are expanded to facilitate connection of renewable energies and new load such as heat pumps and electric mobility. On the one hand, gas networks are preparing for a phase-out and, on the other hand, for a possible repurposing for transportation of hydrogen. At a communal level, the heat supply moves towards heat pumps and district heating, both in turn affecting electricity and gas infrastructure. Lastly, infrastructure for hydrogen and CO2 for CCS are being developed. These developments affect various stages within the energy sectors. These simultaneous and interactive developments require coordination between and within the different energy infrastructure. Improving the coordination of energy infrastructures has been coined Whole System Approach (WSA). In this report, we examine approaches and policy measures for applying the Whole System Approach.

11/12/2023
Bremen Energy Working Papers No. 46
Market design for the procurement of reactive power: the current state in Germany
Anna Pechan and Marius Buchmann
Abstract: The market-based procurement of system services for network operators is gaining momentum in the current debate about the future market design in the energy sector. Since current sources of reactive power are primarily fossil-fuel power plants which will not be available in a carbon neutral energy system, reactive power will be sources from distributed assets in the electricity networks. The German regulator has proposed new rules for reactive power procurement, which are based on three pillars: The technical connection agreements, fully integrated network components owned by the network operators and market-based procurement. While this approach is primarily aiming at the reactive power demand on the transmission grid level, assets from the medium voltage grid can participate in this process as well. We evaluate this approach from an economic perspective and conclude that while such a three-pillar system can secure an effective provision of reactive power, the efficiency heavily depends on the regulatory system and that it provides the correct incentives for the network operator.

28/06/2023
Bremen Energy Working Papers No. 45
Increasing resilience of electricity networks: Auctioning of priority supply to minimize outage costs
Anna Pechan, Gert Brunekreeft and Martin Palovic
Abstract: This article presents an approach to minimize the outage costs during power supply disruptions and, thus, to incentivize efficient resilience investment by network users. The central problem to be solved is the information asymmetry between network operators and network users on outage and backup costs. We present an auction of priority positions among network users based on the Vickrey-Clarke-Groves mechanism, using a numerical example, to solve the problem. Under the mechanism, each winning bidder pays for the externality exerted on the other bidders by holding a certain position, excluding her own bid, which induces truthful bidding. Minimizing the damage from power supply interruptions, the mechanism improves the resilience of the power system not only in the short term but also in the long term.

06/05/2023
Bremen Energy Working Papers No. 44
Resilience regulation: An incentive scheme for regulated electricity network operators to improve resilience
Gert Brunekreeft, Marius Buchmann, Martin Palovic and Anna Pechan
Abstract: This paper presents an approach for resilience incentives in the regulation of electricity network operators. Resilience is the ability of the power system to deal quickly and efficiently with large-scale and long-lasting power interruptions. It comprises two related aspects: minimizing the damage caused by an outage and increasing the robustness of the system. The resilience regulation proposed in this paper contains two complementary parts. First, a resilience incentive mechanism, which aims at internalizing external effects of resilience improvement. This part relies on so-called duration-dependent consumer damage functions (CDFs). Second, a forward-looking budget approach with a sharing factor to strengthen incentives for resilience expenses within regulatory constraints.

17/04/2023
Bremen Energy Working Papers
Risks and incentives for gaming in electricity redispatch markets
Anna Pechan, Christine Brandstätt, Gert Brunekreeft and Martin Palovic
Abstract: Market design for electricity often ignores network congestion initially and addresses it in a second, so-called 'redispatch' stage. For market participants, any two-stage design offers an opportunity to strategically optimize between the different market stages. The current debate is how to design a market-based redispatch to integrate new actors, in particular consumers, given increasing levels of congestion. Strategic bidding may occur if market players anticipate congestion in their region and manipulate bidding to exploit this congestion.
In this paper, we pick up the current debate and study the precise incentives for gaming with respect to competitive conditions on the market with a formal model. We propose that depending on competitive conditions, the expected profits of gaming can be negative and link the range of negative expected gaming profits to a so-called reference bidder, reflecting competitive conditions in the market. We also discuss how several potential remedies can increase the risk of the gaming strategy and can thereby reduce the practical potential for gaming. With this paper, we provide the theoretical framework for authorities and empirical works to assess the potential of market-based as opposed to administrative redispatch.

10/03/2022
Bremen Energy Working Papers
Future of Gas – Umgang mit stranded asset Risiken bei der Erdgasinfrastruktur
Marius Buchmann, Gert Brunekreeft, Martin Palovic und Anna Pechan
Abstract: Im Fokus des Projektvorhabens im Auftrag der EWE NETZ GmbH stand der Umgang mit stranded asset Risiken im Bereich der Gasnetze, die sich durch die neuen politischen Rahmenbedingungen zur Klimaneutralität bis 2045 ergeben. Basierend auf einer Analyse der international bereits umgesetzten Ansätze zur Adressierung des stranded asset Risikos wurden einzelne Ansätze modellgestützt auf ihre Anwendung in Deutschland hin untersucht. Folgende Kernaussagen können aus der Analyse abgeleitet werden:
Eine anteilige Reduktion des stranded asset Risikos für den Netzbetreiber durch die Anpassung des Abschreibungsprofils über einen flexiblen Anpassungsfaktor (im Sinne z.B. einer degressiven Abschreibung) analog zur Umsetzung in den Niederlanden kann ein effektiver Weg sein, das stranded asset Risiko für die Netzbetreiber zu reduzieren. Es verbleibt aber ein Restrisiko bei den Netzbetreibern. Hier gibt es verschiedene Optionen, um mit diesem Restrisiko zu verfahren, wie wir in dem Bericht näher beschrieben.

10/03/2022
Bremen Energy Working Papers
Coordination of power network operators as a game-theoretical problem
Martin Palovic
Abstract: We analyse incentive problems in coordination of network operators that purchase services for electricity networks from distributed resources. Such services are often associated with externalities that make the social optimum costly against the individual one. However, a costly reaction of other operators occurs when the social optimum is missed. Regular network situations result in game-theoretical problems like prisoner’s dilemma or chicken that are played in a random order in an infinitely repeated game. The outcome of this complex game-theoretical setting, i.e. adopted strategies, is difficult to predict. Adjustments to network regulation aiming to internalize external effects are discussed as a remedy.

03/15/2022
Bremen Energy Working Papers
Regulatorische Experimente und Anreizregulierung – Erfahrungen mit der SINTEG-V
Gert Brunekreeft, Marius Buchmann & Julia Kusznir
Zeitschrift für Energiewirtschaft Vol 46 (3)
Abstract: Mit der zunehmenden Dezentralisierung und Digitalisierung der Stromversorgung steigt auch der Bedarf an Innovationen im regulatorischen Rahmen, um die institutionellen Rahmenbedingungen an die sich ändernden Anforderungen anzupassen. Die SINTEG-Verordnung und analoge Ansätze für Reallabore gehen einen Schritt in diese Richtung, führen in ihrer Umsetzung aber noch zu zentralen Hemmnissen für regulatorische Innovationen. Insbesondere der eingeschränkte Anwendungsbereich, der administrative Aufwand und die mangelnden Anreize für Teilnehmer wurden in Rahmen von Experteninterviews als zentrale Schwachstellen der aktuellen regulatorischen Experimente basierend auf der SINTEG-Verordnung identifiziert. Wir schlagen daher in diesem Artikel mit dem Experimentierbudget und der Anwendung von Regulatory Innovation Trials (RIT) zwei Ansätze vor, um bestehende Konzepte für regulatorische Experimente weiterzuentwickeln und um Innovationen im Regelrahmen (bspw. der ARegV) zu ermöglichen.

11/05/2021
Gutachten zu Digitalisierung und Innovation im Auftrag von TransnetBW
Weiterentwicklung der Anreize zur Stärkung von Digitalisierung und Innovation in der Anreizregulierung der ÜNB
Gert Brunekreeft , Marius Buchmann, Julia Kusznir, Roland Meyer, Sahar Shamsi & Carlotta von Bebenburg
Abstract: Die Energiewende und die Digitalisierung stellen die ÜNB vor neue Herausforderungen und erfordern Investitionen sowie Innovationen. Zudem werden Innovationsprojekte immer wieder in netzbetreiberübergreifender Kooperation durchgeführt, zum Teil auch pan-europäisch. Gleichzeitig unterliegen die ÜNB einer Regulierung, die auf die individuelle Effizienzsteigerung bei den Netzbetreibern abzielt und national unterschiedlich ausgestaltet ist. Vor diesem Hintergrund geht die Studie zwei Fragen nach: Erstens, werden innovative Aktivitäten unter der aktuellen Netzregulierung, wie in der Anreizregulierungsverordnung (ARegV) geregelt, hinreichend beanreizt und Kooperationen ermöglicht? Zweitens, wo das nicht der Fall sein sollte, wie könnte eine effektive Beanreizung verbessert werden? Der Fokus der vorliegenden Studie liegt auf dem Änderungsbedarf der Regulierung infolge der voranschreitenden Digitalisierung.
Download (German).
Download (English).

10/21/2021
Bremen Energy Working Paper
Network charging schemes and self-supply: instruments to prevent self-reinforcing dynamics
Christine Brandstätt
Bremen Energy Working Papers No. 37, October 2021
Abstract: Self-supply can destabilize the finance of a distribution network. This paper analyses under which circumstances the tariff structure of a distribution network is stable or unstable under pressure of self-supply and provides recommendation how to change the tariff structure to restore stability if it is unstable. This paper analyses the occurrence of self-reinforcing dynamics in relation to volumetric network tariffs and surcharges in networks with a high propensity for self-supply. We model the level of self-supply endogenously depending on profitability and explore network tariffs that avoid an unstable dynamic for investments into self-supply in the system. Analysed tariff modifications concern the energy and load split, the extent of netting, and a variation in cost pass-through to lower network levels. Adding to the recent literature, we explore the option to calibrate tariff parameters predetermined as well as endogenously linked to self-supply levels in the network. We find endogenously determined modifications of load- and energy split and variations in the cost pass-through from upper network levels between parallel grids most promising to prevent a self-reinforcing dynamic. The analysed modifications also open up the possibility to calibrate a new, sustainable level of self-supply and to incorporate uncertainties in the tariff design.
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10/11/2021
Report dena Leitstudie
Handlungsbedarfe und Weiterentwicklungsoptionen im Energiemarktdesign auf dem Weg zur Klimaneutralität
Marius Buchmann, Gert Brunekreeft, Christine Brandstätt, Martin Palovic und Anna Pechan
Begleitung des Querschnittsmoduls Energiemarktdesign, Gutachten im Rahmen der dena-Leitstudie Aufbruch Klimaneutralität.
Abstract: Die Ergebnisse der Modellierung im Rahmen der dena Studie „Aufbruch Klimaneutralität“ zeigen einen hohen Handlungsbedarf im Regelrahmen der Energiemärkte. Dieses Gutachten, erstellt durch Bremen Energy Research an der Jacobs University Bremen, spezifiziert diesen Handlungsbedarf und mögliche Handlungsoptionen im Energiemarktdesign, um die Transformation zur Klimaneutralität bis 2045 durch ökonomische Instrumente zu begleiten. Gemeinsam mit den Projektpartnern wurden die zentralen Anforderungen an das Marktdesign und die Hürden im aktuellen Regelrahmen, die einer Erfüllung dieser Anforderungen
entgegenstehen, identifiziert und durch die GutachterInnen zusammengefasst.
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05/20/2021
Bremen Energy Working Paper
Strategisches Verhalten bei marktbasiertem Redispatch: Die internationalen Erfahrungen
Martin Palovic, Christine Brandstätt, Gert Brunekreeft & Marius Buchmann
Bremen Energy Working Papers No. 36, Mai 2021
Abstract: Diese Studie untersucht die internationalen Erfahrungen mit marktbasiertem Redispatch. Der Fokus liegt auf zwei Ausprägungen von strategischem Verhalten: der Ausübung von Marktmacht und dem so genannten Inc-dec gaming. Dabei kommt die Untersuchung zu zwei zentralen Aussagen. Erstens, in der untersuchten internationalen Erfahrung wird strategisches Verhalten primär mit mangelndem Wettbewerb innerhalb der Engpassregionen und damit durch Marktmacht begründet. Inc-dec gaming, wenn vorhanden, wird als eine Begleiterscheinung der Marktmachtausübung eingestuft. Zweitens, strategisches Verhalten kann mit geeigneten Gegenmaßnahmen adressiert werden. In der Summe erscheint daher das Potential für strategisches Verhalten bei marktbasiertem Redispatch zu gering, um den Ausschluss des marktbasierten Redispatch zu rechtfertigen.
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11/22/2020
Bremen Energy Working Paper
Output-orientierte Regulierung - ein Überblick
Gert Brunekreeft, Julia Kusznir & Roland Meyer
Bremen Energy Working Papers No. 35, November 2020
Abstract: Dieser Bericht greift mit der output-orientierten Regulierung (OOR) eine aktuelle Entwicklung in der Regulierungspraxis auf, die insbesondere durch die Energiewende an Relevanz gewinnt. Ziel der OOR ist die gezielte Beanreizung vorgegebener Leistungsziele (Outputs), die im Rahmen einer ansonsten vorwiegend auf Kosteneffizienz ausgerichteten Anreizregulierung nicht im gesellschaftlich erwünschten Maße gefördert werden. Dabei ersetzt OOR nicht die bestehende Erlösobergrenze der Anreizregulierung, sondern ergänzt diese um Erlöselemente (wie Bonus/Malus-Zahlungen), die an das Erreichen regulatorisch vorgegebener Outputziele gekoppelt sind. In der zu Grunde liegenden Studie wurden die zentralen ökonomischen Gründe für den Einsatz output-orientierter Regulierungsinstrumente erörtert sowie konkrete Anwendungsbereiche für die Regulierung von Stromnetzbetreibern aufgezeigt und diskutiert. Dabei stehen drei Begründungen für OOR im Vordergrund: 1. value creation, 2. Whole System Approach, und 3. kostenseitige Verzerrung und Risiko. Häufig lassen sich die Begründungen auf externe Effekte zurückführen, die mittels OOR internalisiert werden können. Dabei ist die konkrete Umsetzung jedoch je nach Anwendungsbereich mit Herausforderungen verbunden, die im Rahmen der Untersuchung nur angedeutet werden konnten und einer tiefer gehenden Analyse bedürfen.
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10/06/2020
BER to accompany dena Blockchain study
The German Energy Agency (dena) is starting a pilot project on the development of a "Blockchain Machine Identity Ledger" together with 21 partners. The technology aims to provide an infrastructure for automatic device management in a complex digital energy system connecting many producers and consumers with a variety of energy sources. Within this project the BER team will carry out economic flanking research. For more information see the dena press release.

09/08/2020
Publication
Oxford Energy Forum – Special Issue on “Electricity Networks in a Net-Zero-Carbon Economy”
This special issue of the Oxford Energy Forum, co-edited by Christine Brandstätt, is dedicated to electricity networks. The publication covers 13 contributions dealing with issues of network regulation, market design and institutions to improve investment and operation of electricity networks and facilitate the integrations of network users in a zero-carbon economy. The team of Bremen Energy research participated with two contributions:

Rethinking the Network Access Regime: The Case for Differentiated and Tradeable Access Rights
Christine Brandstätt and Rahmat Poudineh
Oxford Energy Forum, Issue 124, p. 24-28

The Emergence of Output-Oriented Network Regulation
Gert Brunekreeft, Julia Kusznir, and Roland Meyer
Oxford Energy Forum, Issue 124, p. 34-38.
The full publication is available for Download on the website of Oxford Energy Forum.

08/24/2020
Publication
How decentralization drives a change of the institutional framework on the distribution grid level in the electricity sector – the case of local congestion markets
Marius Buchmann
Energy Policy Vol. 145, October 2020
Abstract: The increasing share of renewables in the electricity system results in congestion on all network levels. To address this congestion, the EU Commission proposed that distribution network operators become responsible for local congestion management. Within this paper we analyze the institutional implications of the introduction of local congestion markets and identify three discrimination concerns related to the DSO’s role on these markets. We will argue that the standard governance models (legal unbundling, ownership unbundling, IDSO) are not adequate here. Instead, we discuss two novel approaches: The introduction of Independent Distribution Operators (IDO) or alternatively, a Common Flexibility Platform (CFP). Since the CFP does not require stronger unbundling of DSOs, we recommend to investigate this solution further.
External link

08/18/2020
Bremen Energy Working Paper
Regulatorische Anreize für ein effizientes Engpassmanagement für Stromnetzbetreiber in der ARegV: FlexShare und FOCS
Roland Meyer
Bremen Energy Working Papers No. 34, August 2020
Abstract: Die Zunahme von Netzengpässen durch dezentrale Erzeuger erfordert eine aktive regulatorische Beanreizung von Maßnahmen des Engpassmanagements (EPM) als Alternative zum konventionellen Netzausbau. Gleichzeitig soll der Kostenanstieg mittels Effizienzanreizen begrenzt werden. Für die geplante Anpassung der ARegV im Rahmen von NABEG 2.0 ist ein Sliding-Scale-Mechanismus in der Diskussion, der einen Teil der EPM-Kosten in das Budgetprinzip der ARegV überführt. Das zunehmende Risiko externer Kosteneinflüsse gefährdet jedoch das Ziel der Maßnahmenneutralität zwischen operativen EPM-Maßnahmen und kapitalintensivem Netzausbau. In diesem Paper wird mit „FlexShare & FOCS“ ein Anreizsystem entwickelt, das eine Sliding-Scale-Komponente (FlexShare) um das Instrument eines „fixed-OPEX-CAPEX-Share“ ergänzt (FOCS). Bei diesem zweistufigen Ansatz wird ein Teil der beanreizten Kosten wie Kapitalausgaben regulatorisch aktiviert und verzinst. Durch den Kapitalkostenabgleich wird das Erlösrisiko begrenzt und einer möglichen CAPEX-Verzerrung entgegengewirkt. Simulationsrechnungen mit einem Regulierungsmodell zeigen, dass hierdurch Wohlfahrtsverbesserungen erzielt werden können, da bei gleichem Risiko höhere Effizienzanreize gesetzt werden können.
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08/10/2020
Publication
TOTEX Malmquist Index for RPI-X Regulation: Does it Correctly Estimate the True Frontier Shift?
Roland Meyer, Gert Brunekreeft, and George Elias
Journal of Regulatory Economics 58,78–97(2020)
Abstract: The X in CPI-X regulation aims to adjust price or revenue allowances to changes in total factor productivity and input prices. If calculated correctly, both terms together correspond to the change in efficient costs which can be determined by applying a cost Malmquist index. However, regulators typically lack the required data on input quantities and prices. As an alternative, regulation authorities may apply a TOTEX Malmquist index to measure the total cost change. We study under which conditions this total cost change correctly estimates the true efficient cost change. Overall, we conclude that the TOTEX Malmquist approach can be used for CPI-X regulation. However, regulators should be aware of the limitations and make adjustments in the implementation where necessary.
External link

05/05/2020
Short report on „Risks of strategic behaviour of consumers in flexibility and other energy markets“ (published in German)
Gert Brunekreeft, Anna Pechan, Martin Palovic, Roland Meyer, Christine Brandstätt, Marius Buchmann
Study prepared for Deutsche Energie-Agentur (dena), March 2020
Abstract: Local flexibility markets are currently being discussed and tested as one instrument to address network congestion resulting from supra-regional electricity trade. When electricity is first traded supra-regionally and then locally, incentives for strategic behaviour (gaming) may result. This phenomenon has so far been analysed for generators only. In this report we focus on the consumer side and discusses under which conditions incentives for gaming arise for them and how these may be mitigated. We find that in general consumers have the same incentives as generators for gaming, which largely depend on the spread between the supra-regional and local market prices and on the probability of successful gaming. Sufficiently strong competition turns gaming into a risky strategy and reduces its attractiveness. In detail the incentives of consumers for gaming differ from generators, e.g. due to differences in the institutional framework and in the costs of failure. The participation of consumers in local flexibility markets can reduce the incentives for gaming; yet the total effect is not clear. We identify different measures to address the remaining gaming potential.
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03/02/2020
Report on "Smarter incentives for transmission system operators"
Oxera in collaboration with Gert Brunekreeft et al.
Study prepared for TenneT, July 2018
Abstract: Most regulatory systems for transmission operators in Europe focus strongly on the construction and remuneration of assets. However, the role of a transmission system operator (TSO) is much broader than this. Incentives provided by the regulatory system need to reflect that breadth. TSOs need to balance several inputs and outputs in a way that, ideally, would be beneficial to society. In order to give the TSO the opportunity to maximise ‘social welfare’,financial incentives should cover all their relevant inputs and outputs. In turn, these incentives should be balanced and aligned. The report provides a high-level review of existing TSO incentives, and proposes two alternatives for regulatory reform that could improve the performance of TSOs in the delivery of their main roles or functions.
External link

02/24/2020
Bremen Energy Working Paper
OPEX-risk as a source of CAPEX-bias in monopoly regulation
Gert Brunekreeft and Margarethe Rammerstorfer
Bremen Energy Working Papers No. 32, February 2020
Abstract: This paper shows with a formal model that under monopoly regulation, OPEX-risk can be a source for a CAPEX-bias. If OPEX and CAPEX are substitutes, the regulated firm can reduce the risk of the firm and thereby reduce the true cost of capital by rebalancing OPEX and CAPEX. If the allowed rate-of-return on capital is not influenced by the firm’s actions, this creates a margin between the allowed rate-of-return and the true cost of capital. We examine two remedies: first, fixed-OPEX-CAPEX-share (FOCS) which is a variation of TOTEX-regulation and second, OPEX-mark-up. FOCS internalizes the CAPEX-bias and can be implemented easily. The OPEX-mark-up is effective, but it will be challenging to reach the optimum.
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09/28/2019
Bremen Energy Working Paper
Assessment of the drafted German Integrated National Energy and Climate Plan
Marius Buchmann, Julia Kusznir, and Gert Brunekreeft
Bremen Energy Working Papers No. 30, September 2019
published in Economics and Policy of Energy and the Environment, 1, 2019 pp. 85–96
Abstract: The X in RPI-X regulation aims to adjust price or revenue allowances of regulated firms to changes in total factor productivity and input prices. If calculated correctly, both terms together correspond to the change in efficient costs which can be determined by applying a cost Malmquist index. However, regulators typically lack the required data on input quantities and prices. As an alternative, regulation authorities may apply a TOTEX Malmquist index to measure the total cost change. We study under which conditions this total cost change correctly estimates the true efficient cost change. We find that the TOTEX Malmquist index provides an undistorted estimate at least under two conditions, namely if (1) the frontier firms identified in the benchmarking procedure are either fully efficient, or if their degree of inefficiency remains constant over time, and (2) if input prices either stay constant or change by the same proportion for all firms.

09/28/2019
Christine Brandstätt to become OIES-Saudi Aramco Fellow at The Oxford Institute for Energy Studies
As from October 2019, Christine Brandstätt will be "OIES-Saudi Aramco Fellow" at The Oxford Institute for Energy Studies. During her research visit, Christine will examine "Auctions and Pricing for Utilization and sizing of capacity in Distribution Networks".See the Oxford Institute's website for more information.

09/05/2019
Publication
Effects of a Delayed Expansion of Interconnector Capacities in a High RES-E European Electricity System
David Ritter, Roland Meyer, Matthias Koch, Markus Haller, Dierk Bauknecht, and Christoph Heinemann
published in Energies, 2019, 12(16), 3098
Abstract: In order to achieve a high renewable share in the electricity system, a significant expansion of cross-border exchange capacities is planned. Historically, the actual expansion of interconnector capacities has significantly lagged behind the planned expansion. This study examines the impact that such continued delays would have when compared to a strong interconnector expansion in an ambitious energy transition scenario. For this purpose, scenarios for the years 2030, 2040, and 2050 are examined using the electricity market model PowerFlex EU. The analysis reveals that both CO2 emissions and variable costs of electricity generation increase if interconnector expansion is delayed. This effect is most significant in the scenario year 2050, where lower connectivity leads roughly to a doubling of both CO2 emissions and variable costs of electricity generation. This increase results from a lower level of European electricity trading, a curtailment of electricity from a renewable energy source (RES-E), and a corresponding higher level of conventional electricity generation. Most notably, in Southern and Central Europe, less interconnection leads to higher use of natural gas power plants since less renewable electricity from Northern Europe can be integrated into the European grid.
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07/30/2019
Bremen Energy Working Paper
TOTEX Malmquist Index for RPI-X Regulation: Does it Correctly Estimate the True Frontier Shift?
Roland Meyer, Gert Brunekreeft, and George Elias
Bremen Energy Working Papers No. 29, July 2019
Abstract: The X in RPI-X regulation aims to adjust price or revenue allowances of regulated firms to changes in total factor productivity and input prices. If calculated correctly, both terms together correspond to the change in efficient costs which can be determined by applying a cost Malmquist index. However, regulators typically lack the required data on input quantities and prices. As an alternative, regulation authorities may apply a TOTEX Malmquist index to measure the total cost change. We study under which conditions this total cost change correctly estimates the true efficient cost change. We find that the TOTEX Malmquist index provides an undistorted estimate at least under two conditions, namely if (1) the frontier firms identified in the benchmarking procedure are either fully efficient, or if their degree of inefficiency remains constant over time, and (2) if input prices either stay constant or change by the same proportion for all firms.

02/18/2019
Energy Industry Meeting at the IESE Business School
On 13th February, our colleague Marius Buchmann was invited to the 16th Energy Industry Meeting at the IESE Business School in Madrid. Together with with Francesco Venturini (CEO of Enel X) and Isaac Hernández Vargas (Google Cloud) he discussed how energy utilities might be disrupted by new innovations.
Marius introduced the case of Germany and how the business model of German utilities has already been affected by decentralization and digitalization. Some of the insights Marius presented have been published in a paper for the Energy Journal.
For additional insights on disruptive innovations in the energy sector, take a look at Marius' blog post.

01/15/2019
Bremen Energy Working Paper
Constrained Connection for Distributed Generation by DSOs in European Countries
Ken Furusawa, Gert Brunekreeft, and Toru Hattori
Bremen Energy Working Papers No. 28, January 2019
Abstract: A high penetration of renewable energy sources (RES) connected to the distribution network due to Feed-in-Tariff (FIT) brought many challenges for DSOs. With the responsibility to connect, DSOs may be required to make investment in the network. In order to connect distributed generation (DG) while deferring the investment, European DSOs use “constrained connection” by which DG is connected conditional on the curtailment. Different approaches for constrained connection in Europe exist and case studies of the different approaches in Germany, France, and UK show that the relative acceptability of DG and ease of curtailment by DSOs are different, depending on the energy policy background and technology available in each country.
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10/26/2018
BER project "ARegV 3.0" to start in January 2019
The developments of Smart Grids alter the roles and responsibilities of distribution network operators (DNOs) and requires rethinking the regulatory framework, which in Germany is determined by the "Anreizregulierungsverordnung", in short "ARegV".
The most recent ARegV amendment offers additional incentives for network investments but lacks incentives for smartness. Thinking one step further, however, the question is how the conceptual development of regulation towards a future "ARegV 3.0" should look like. This research project analyses misaligned incentives for DNOs based on both a network model and a regulatory model and suggests further adjustments of the regulatory framework.
More information on our project site ARegV 3.0.

10/26/2018
Marius Buchmann to chair session “Innovation in trading“ on "European Uititiy Week" in Vienna, Austria on November 11, 2018
Technological developments are drastically changing the energy trading industry. Technologies such as Blockchain, automated trading and Artificial intelligence will profoundly change what we recognize today as 'trading'. How will technology change trading? And what does the trader of the future look like? These are the key question that we will answer in this session. Marius Buchmann will open and host this session with presentations from Innogy innovation hub, econtrol, ponton, ark energy and others.
More information of the website of European Utility Week.

10/26/2018
Presentation of Marius Buchmann on "The data management challenge for smart grids" on October 12, 2018.
"10th FSR – BNetzA Forum on the Legal Issues of Energy Regulation", Florence School of Regulation
Marius Buchmann presented his views on the current institutional/regulatory challenges that arise in the context of data management from smart metering and other smart home applications. What are the different data management models that are discussed for smart grids in Europe? How to address data monopolies? What do network and platform economies tell us when it comes to data platform markets? What will the future of data management look like? This and other issues were discussed in Berlin at the BNetzA on invitation from the Florence School of Regulation (FSR).
More information of the event website of Florence School of Regulation.

06/18/2018
BER on IAEE Conference in Groningen
The BER team participated on this year’s 41st IAEE Conference in Groningen, presenting in and chairing several session on energy issues.
Gert Brunekreeft was part of the programme committee and chaired the round table session on “Disruptive Challenges for the Energy Industry” among others featuring Marius Buchmann as one of the speakers. Christine Brandstätt chaired the session "Policy & Regulation I".
In the concurrent sessions, the team members held the following presentations:

Christine Brandstätt: “Evolution of self-supply with different network-charging schemes” (download slides as pdf)
Marius Buchmann: “1st thoughts on blockchain and its potential institutional implications” (download slides as pdf)
Roland Meyer: “Malmquist for German energy network regulation” (download slides as pdf)
Martin Palovic: “Smart grid congestion mechanisms - how to allign incentives” (download slides as pdf)

More information of the official IAEE conference website.

06/18/2018
Project website of "Quarree100" now online
More information on the project "Quarree100" is now available on the new project website Quarree100

02/23/2018
Presentation of BER’s research at the "Symposium for Energy Innovations" at the Technical University Graz
BER Research Associate Christine Brandstätt presented our work on “Network tariff dynamics in view of self supply” on February 15th at the Symposium for Energy Innovations at Technical University Graz. The event took place for the 15th time, this year under the frame topic of “New energy for our changing Europe”. The presentation was part of the “Energy Markets and Flexibilization” stream. It contains results from BER's project “Network tariff dynamics in view of self supply” funded by the foundation for energy research in Baden-Württemberg.

02/15/2018
Kick-off meeting for joint research project "Quarree100"
Starting signal for the project Quarree100. The project partners will meet on February 26, 2018 for the kick-off meeting of the joint project in the Heider city theater. For this purpose, about 200 guests are expected. The central aspect of the project is the research and implementation of a sustainable energy supply in the Schleswig-Holstein district town Heide with the participation of local actors.

02/15/2018
Bremen Energy Working Paper
Cross-border Electricity Interconnectors in the EU: the Status Quo
Gert Brunekreeft and Roland Meyer
Bremen Energy Working Papers No. 27, February 2018
Abstract: An important goal of the European Commission is the promotion of the internal energy market (here specifically electricity), which requires sufficient and adequate cross-border interconnector capacity. However, cross-border interconnector capacity is scarce and, more importantly, the progress of interconnector capacity expansion is too slow. As a result, the Commission has proposed several policy measures to accelerate interconnector investment. This paper provides an overview of the policy debate on interconnector expansion and studies two particular points. First, the effects of network regulation on the interconnector investment and the policy proposals to improve the investment incentives, and more specifically, how to deal with risks. Second, we study the policies and effects of capacity remuneration mechanisms (CRMs) on the use of and the need for cross-border interconnector capacity.
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07/21/2017
Erasmus Energy Science Award 2017 for Dr. Marius Buchmann
Blockchain in the Energy Sector: Applications and Institutional Implications
Marius Buchmann won the Erasmus Energy Science Award 2017 for his Paper "Blockchain in the Energy Sector: Applications and Institutional Implications". His paper was picked by the judges for reflecting the growing awareness of the blockchain technology within the energy sector and analysing its opportunities and challenges.

05/13/2017
Bremen Energy Working Paper
Regulatorische Herausforderungen für Multi-Use-Speicher in Stromverteilnetzen – ein Ausschreibungsmodell
Roland Meyer, Gert Brunekreeft, Martin Palovic und Daniel Speiser
Bremen Energy Working Papers No. 26, May 2017
Abstract: Stromspeicher erscheinen derzeit vor allem in Form von Multi-Use-Speichern wirtschaftlich darstellbar, die nach Bedarf für Netzzwecke eingesetzt werden und um am Strommarkt Handelserlöse zur erzielen. Die technischen Anforderungen aus Netzsicht erfordern in der Regel, dass die Initiative für einen solchen Speicher vom Netzbetreiber ausgeht. Darf ein rechtlich entflochtener Verteilnetzbetreiber (VNB) jedoch selbst einen solchen Speicher errichten und betreiben, wenn sich kein günstigerer Marktinvestor findet? Die regulatorischen Herausforderungen liegen vor allem in den Entflechtungsregeln, die eine direkte Handelsaktivität untersagen. Das in diesem Beitrag skizzierte Drei-Stufen-Modell zeigt, wie eine entflechtungskonforme Bereitstellung und der Betrieb auch eines VNB-eigenen Speichers mittels Ausschreibungen erreicht werden können. Fragen der Diskriminierungspotenziale und Effizienzanreize werden durch die Form der regulatorischen Kostenbehandlung adressiert: Um effiziente Anreize in beiden Ausschreibungen sicherzustellen, sollte der Gebotspreis des VNB maßgebend für die Kostenanerkennung sein.
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05/13/2017
Publication
The Need for Competition between Decentralized Governance Approaches for Data Exchange in Smart Electricity Grids - Fiscal Federalism vs. Polycentric Governance
Marius Buchmann
published in The Journal of Economic Behavior and Organization. Volume 139, 106-117
Abstract: The institutional framework of the electricity sector is challenged by digitalization. With smart metering, data on energy consumption and production becomes available. Information management shall secure the efficient exchange of this data (e.g. from smart metering) in smart grids. Currently, national as well as regional governance approaches for information management systems are being developed. We discuss how the scale and scope of an information management system has an influence on the level of innovation in the process of the data exchange. We define information management as a club good and apply the insights from the theory of fiscal federalism. We conclude that neither of the extremes of national (central) and decentralized governance approaches for information management will be optimal. Rather, we identify the need of polycentric governance approaches that compete with each other to define the optimal degree of decentralization.
External link

05/13/2017
Publication
Xgen in der Anreizregulierung: Was kann der Malmquist-Index?
Gert Brunekreeft und Stephan Vaterlaus
published in Energiewirtschaftliche Tagesfragen , No. 3, 2017, 13-16.
Abstract: Aktuell muss der generelle sektorale Produktivitätsfaktor (X-Faktor oder XGEN) für die dritte Regulierungsperiode der Anreizregulierung für Energienetze bestimmt werden. Dabei lässt die Anreizregulierungsverordnung (ARegV) bei der Bestimmung des XGEN die Verwendung von Unternehmensdaten zu, was in den Diskussionen in der Regel mit der sogenannten Malmquist-Methode in Verbindung gebracht wird. Die Frage stellt sich: Ist die Malmquist-Methode zur Bestimmung eines XGEN im regulatorischen Kontext überhaupt geeignet? In dem Aufsatz werden zwei wichtige Umsetzungsfragen in Bezug auf die Malmquist-Methode aufgegriffen. Zum einen diskutieren wir, welche Auswirkungen die Tatsache auf die Malmquist-Methode hat, dass die BNetzA nur über Gesamtkosten (TOTEX) verfügt. Zum anderen untersuchen wir auf Basis von Simulationen den Einfluss der Datenqualität auf die Robustheit der Malmquist-Ergebnisse.
External link

01/11/2017
Joint study of Jacobs University and Polynomics on the Malmquist Index as a means to calculate the general X-Factor for electricity distribution companies.
In German: "Die Ermittlung des technologischen Fortschritts anhand von Unternehmensdaten – Der Einsatz der Malmquist-Methode im deutschen Regulierungsrahmen"
In a joint research study, prepared for the German electricity distribution company NetzeBW, Polynomics and Jacobs University Bremen analyse the use of the Malmquist Index to calculate the general X-Factor (Xgen) for electricity distribution companies in the German regulatory framework. The Xgen needs to be calculated for the next regulatory period starting 2019; currently, the debate is about the method of calculation: Törnquist or Malmquist?

06/30/2015
BER study on the general X-Factor for electricity distribution companies in the face of energy transition.
"Die 3. Periode ARegV: Xgen und die Energiewende"
The general X-Factor (Xgen) as part of price-based regulation aims to capture total factor productivity (TFP) of the network business and ensure a fair distribution of efficiency gains between network companies and consumers.

03/30/2015
Joint study of Jacobs University Bremen and CRIEPI, Tokyo
"Distribution Planning and Pricing in View of Increasing Shares of Intermittent, Renewable Energy in Germany and Japan"
The purpose of this research is to evaluate the impact of increasing shares of intermittent, renewable energy in distribution grids. Our research mainly relies on in-depth interviews with sector-experts from German utilities. We discuss both effects in network planning and challenges for network pricing.

09/03/2014
Joint research project on future decentralized power networks
"Collective non-linear dynamics of power networks (ConDyNet)"
The project analyzes the dynamics in newly arising complex, decentralized power networks. It is part of the initiative "futureproof networks" funded by the ministry for economic affairs and energy, and the ministry for education and research over a timespan of 3 years. Together with Potsdam Institute for Climate Impact Research, Max Planck Institute for Dynamics and Sefl-Organization, Frankfurt Institute for Advanced Studies and Jülich Research Center, we will model and simulate optimization options, critical network states and risk scenarios. The focus of Bremen Energy Research herein will be on the economic framework for such complex, decentralized networks; deploying agent-based computational economics to asses the influence of innovative pricing scemes on their operation and development.

07/10/2014
dena Smart Meter Study
"Implementation of Smart Meters in Germany"
The dena Smart Meter Study analyses the parameters influencing efficient and operative structuring of the rollout of intelligent meters and intelligent metering systems in Germany. In cooperation with eleven German electricity distribution grid operators or their affiliated metering station companies.

03/31/2014
Joint study of Jacobs University Bremen and CRIEPI, Tokyo
"Unbundling of electricity transmission system operators in Germany – An experience report"
The purpose of this research is to evaluate the impact of vertical unbundling on German electric utilities. Our research mainly relies on in-depth interviews with sector-experts from the German utilities. We will discuss both short-term changes and the long-term impact on competition in the electricity market as well as the impact on costs and security of supply.

03/31/2014
Joint Study of Bremer Energie Institut and WU Wien
"The Institutional Framework for Smart Grids in Austria"
The aim of the project was to identify the key areas within the institutional framework of the electricity sector in Austria where adaptation is required to support the development of smart grids. To address these adjustment requirements we analysed best practises in other countries.

10/13/2013
Jacobs University Study
"Prices and contracts in the German wholesale gas market"
Over the past few months, Jacobs researches belonging to the BER group performed a study where gas-purchasing strategies of German utility companies were analyzed. Within this study, 250 German gas utilities were addressed with a questionnaire about their gas purchasing strategies, historical price data from the last six years were analyzed, as well as interviews with gas market brokers and market price publishing institutions were performed.