Investment Incentives For Flexible Demand Options Under Different Market Designs

Journal article
(Original article)


Publication Details

Author(s): Ambrosius M, Grimm V, Sölch C, Zöttl G
Journal: Energy Policy
Publication year: 2018
Journal issue: 118
Pages range: 372 - 389
ISSN: 0301-4215
Language: English


Abstract

This paper analyzes investment incentives for flexible manufacturing facilities under different market designs. We propose a multi-stage equilibrium model incorporating endogenous determination of generation capacity investment, network expansion and redispatch based on the model introduced by Grimm et al. (2016), including flexibilization of industrial electricity consumption. The model allows to investigate incentives for flexibilization and the impact of flexible industrial electricity consumers on the system. An application to the German electricity market reveals that flexible industrial electricity consumption can be profitable for firms. If the share of flexible electricity consumers is high, price fluctuations are mitigated, which lowers the individual cost savings from demand flexibility. Comparing different market designs, positive impacts of flexible electricity demand on the system are observed in both the system optimum and the market equilibrium. In scenarios with flexible industrial electricity consumption, welfare is considerably higher than in those without. This is due to lower electricity costs of industrial consumers, but more importantly due to less investment in conventional power generation as well as a reduced transmission network expansion. However, a comparison of nodal and uniform pricing underlines the importance of regional price signals with respect to an efficient allocation of flexible industrial demand.


FAU Authors / FAU Editors

Ambrosius, Mirjam
Grimm, Veronika Prof. Dr.
Lehrstuhl für Volkswirtschaftslehre, insbesondere Wirtschaftstheorie
Lehrstuhl für Volkswirtschaftslehre, insbesondere Wirtschaftstheorie
Sölch, Christian
Lehrstuhl für Volkswirtschaftslehre, insbesondere Wirtschaftstheorie
Zöttl, Gregor Prof. Dr.
Professur für Volkswirtschaftslehre


Additional Organisation
Energie-Campus Nürnberg (EnCN)


How to cite

APA:
Ambrosius, M., Grimm, V., Sölch, C., & Zöttl, G. (2018). Investment Incentives For Flexible Demand Options Under Different Market Designs. Energy Policy, 118, 372 - 389. https://dx.doi.org/10.1016/j.enpol.2018.01.059

MLA:
Ambrosius, Mirjam, et al. "Investment Incentives For Flexible Demand Options Under Different Market Designs." Energy Policy 118 (2018): 372 - 389.

BibTeX: 

Last updated on 2018-08-08 at 18:09