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 Energies2019, 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.
New 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.
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.
New 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.
New 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.
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.
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.
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.
New project website of "Quarree100" now online
More information on the project "Quarree100" is now available on the new project website Quarree100
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.
Link to event site EnInnov 2018
Link to project site Network Tariff Dynamics in View of Self Supply
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.
Link to project site Quarree100
New 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.
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.
New 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.
The Need for Competition between Decentralized Governance Approaches for Data Exchange in Smart Electricity Grids - Fiscal Federalism vs. Polycentric Governance
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.
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.
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?
The final report of the study (in German) can be downloaded here.
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.
The main conclusion is that the previous methodology and parameters may have worked fairly well in the past, but do not appear to provide adequate productivity indicators for the future. Given the fundamental structural changes of the energy transition, one should reconsider the “outputs” based on which the networks’ TFP is calculated.
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.
The results are now available as Bremen Energy Working Papers No. 20.
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.
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.
The final report of the dena Smart Meter Study is now available for download (in German language) on the website of Deutsche Energie-Agentur (dena).
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.
The results are now available as Bremen Energy Working Papers No. 16.
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.
The results are now available at BMVIT Schriftenreihe nachhaltig wirtschaften 7/2014.
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.
The study was introduced to public in autumn 2013 and can be downloaded using the following link: Preis- und Vertragssituation im deutschen Gasmarkt.