Bertsch, Joachim, Brown, Tom, Hagspiel, Simeon and Just, Lisa (2017). The Relevance of Grid Expansion under Zonal Markets. Energy J., 38 (5). S. 129 - 153. CLEVELAND: INT ASSOC ENERGY ECONOMICS. ISSN 1944-9089

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Abstract

The European electricity market design is based on zonal markets with uniform prices. Hence, no differentiated locational price signals are provided within these zones. If intra-zonal congestion occurs due to missing grid expansion, this market design reveals its inherent incompleteness, and might lead to severe short and long-term distortions. In this paper, we study these distortions with a focus on the impact of restricted grid expansion under zonal markets. Therefore, we use a long-term model of the European electricity system and restrict the allowed expansion of the transmission grid per decade. We find that the combination of an incomplete market design and restricted grid expansion leads to a misallocation of generation capacities and the inability to transport electricity to where it is needed. This results in an energy imbalance in some regions of up to 2-3% and difficulty when reaching envisaged political targets in the power sector.

Item Type: Journal Article
Creators:
CreatorsEmailORCIDORCID Put Code
Bertsch, JoachimUNSPECIFIEDUNSPECIFIEDUNSPECIFIED
Brown, TomUNSPECIFIEDUNSPECIFIEDUNSPECIFIED
Hagspiel, SimeonUNSPECIFIEDUNSPECIFIEDUNSPECIFIED
Just, LisaUNSPECIFIEDUNSPECIFIEDUNSPECIFIED
URN: urn:nbn:de:hbz:38-220495
DOI: 10.5547/01956574.38.5.jber
Journal or Publication Title: Energy J.
Volume: 38
Number: 5
Page Range: S. 129 - 153
Date: 2017
Publisher: INT ASSOC ENERGY ECONOMICS
Place of Publication: CLEVELAND
ISSN: 1944-9089
Language: English
Faculty: Unspecified
Divisions: Unspecified
Subjects: no entry
Uncontrolled Keywords:
KeywordsLanguage
Economics; Energy & Fuels; Environmental StudiesMultiple languages
Refereed: Yes
URI: http://kups.ub.uni-koeln.de/id/eprint/22049

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