Endogenous Price Zones and Investment Incentives in Electricity Markets: An Application of Multilevel Optimization with Graph Partitioning

Weiterer Publikationstyp


Details zur Publikation

Autor(en): Ambrosius M, Grimm V, Kleinert T, Liers F, Schmidt M, Zöttl G
Jahr der Veröffentlichung: 2018
Sprache: Englisch


Abstract

In the course of the energy transition, load and supply centers are growing apart in many electricity markets worldwide, rendering regional price signals even more important to provide adequate locational investment incentives. In this context, the establishment of price zones in order to at least partially price grid bottlenecks is under discussion. This paper addresses the key question of how to configure price zones on a network in order to optimally govern investment and production decisions in the long run. We extend the multilevel equilibrium model from Grimm et al. (2017a) to endogenously determine welfare-maximizing price zones for a given electricity market and analyze their impact on market outcomes. This mixed-integer nonlinear model contains a graph partitioning problem on the first level to model the zoning of the network. Using a generalized Benders decomposition and a problem-tailored scenario clustering for reducing the input data size, we are able to solve the model to global optimality even for large instances. We apply the approach to the German electricity market as an example to examine the impact of optimal zoning on key performance indicators such as welfare, generation mix and locations, or electricity prices. It turns out that already a few optimally chosen zones lead to significant welfare gains.


FAU-Autoren / FAU-Herausgeber

Ambrosius, Mirjam
Lehrstuhl für Volkswirtschaftslehre, insbesondere Wirtschaftstheorie
Grimm, Veronika Prof. Dr.
Lehrstuhl für Volkswirtschaftslehre, insbesondere Wirtschaftstheorie
Kleinert, Thomas
Juniorprofessur für Optimierung von Energiesystemen
Liers-Bergmann, Frauke Prof. Dr.
Professur für Diskrete Optimierung in den Ingenieurwissenschaften
Schmidt, Martin Prof. Dr.
Juniorprofessur für Optimierung von Energiesystemen
Zöttl, Gregor Prof. Dr.
Professur für Volkswirtschaftslehre


Zitierweisen

APA:
Ambrosius, M., Grimm, V., Kleinert, T., Liers, F., Schmidt, M., & Zöttl, G. (2018). Endogenous Price Zones and Investment Incentives in Electricity Markets: An Application of Multilevel Optimization with Graph Partitioning.

MLA:
Ambrosius, Mirjam, et al. Endogenous Price Zones and Investment Incentives in Electricity Markets: An Application of Multilevel Optimization with Graph Partitioning. 2018.

BibTeX: 

Zuletzt aktualisiert 2018-26-10 um 10:38