Introduction to stochastic programming

Energy storage for mitigating the variability of renewable electricity sources: An updated review

http://www.eprg.group.cam.ac.uk/wp-content/uploads/2008/11/eprg0617.pdf

CO2 cost pass-through and windfall profits in the power sector

The recent sharp decline in the cost of renewable energy suggests that the production of hydrogen from renewable power through a power-to-gas process might become more economical. Here we examine this alternative from the perspective of an investor who considers a hybrid energy system that combines renewable power with an efficiently sized power-to-gas facility. The available capacity can be optimized in real time to take advantage of fluctuations in electricity prices and intermittent renewable power generation. We apply our model to the current environment in both Germany and Texas and find that renewable hydrogen is already cost competitive in niche applications (€3.23 kg−1), although not yet for industrial-scale supply. This conclusion, however, is projected to change within a decade (€2.50 kg−1) provided recent market trends continue in the coming years. Hydrogen fuel, produced from renewable power, could be critical in the decarbonization of the electricity and transportation sectors. Here, a thorough economic analysis shows that hydrogen obtained from wind power is already cost competitive in niche applications and may become widely competitive in the foreseeable future.

/pdf/economics-of-converting-renewable-power-to-hydrogen-2pko2361ut.pdf

Economics of converting renewable power to hydrogen

The core objective of this paper is to elaborate on historically implemented promotion strategies of renewable energy sources and the associated deployment within the European electricity market. Hence, at a first glance, the historic development of renewable energy sources in the electricity (RES-E) sector is addressed on Member State and on sectoral level as well as consequently discussed according to available RES-E potentials and costs. The specific focus of this paper, are promotion strategies for RES-E options as they are the key driver of an efficient and effective RES-E deployment. Therefore, the paper depicts the main types of different promotion schemes and their properties. Additionally, several cases studies of different European Member States show an in-depth analysis of the different RES-E promotion schemes. In this context, special emphasises are put on the question of effective and efficient promotion scheme designs of different RES-E technologies. Generally, conducted research led to the conclusion, that technology specific financial support measures of RES-E performed much more effective and efficient than others did. Hence, it is not all about the common question of feed-in tariffs vs. quota systems based on tradable green certificates, but more about the design criteria of implemented RES-E support schemes.

A historical review of promotion strategies for electricity from renewable energy sources in EU countries

This paper quantifies the degree of market power in the German wholesale electricity market. A dispatch model simulates competitive marginal costs. In addition to common input factors like plant capacities, fuel prices and load structures, the model also incorporates international power exchange and dynamic effects like start-up costs and hydro storage plant dispatch. The simulated prices are subsequently used as a benchmark for observed electricity prices. The analysis reveals significant market power in the German electricity market, mainly exhibited during peak periods. Producer surplus is also increased significantly due to strategic behavior.

Quantifying market power in the german wholesale electricity market using a dynamic multi-regional dispatch model*

Economics and design of balancing power markets in Germany

Offshore wind energy development has been driven by government support schemes; however, recent cost reductions raise the prospect of offshore wind power becoming cheaper than conventional power generation. Many countries use auctions to provide financial support; however, differences in auction design make their results difficult to compare. Here, we harmonize the auction results from five countries based on their design features, showing that offshore wind power generation can be considered commercially competitive in mature markets. Between 2015 and 2019, the price paid for power from offshore wind farms across northern Europe fell by 11.9 ± 1.6% per year. The bids received in 2019 translate to an average price of €51 ± 3 MWh−1 and substantially different auction designs have received comparably low bids. The level of subsidy implied by the auction results depends on future power prices; however, projects in Germany and the Netherlands are already subsidy-free, and it appears likely that in 2019 the United Kingdom will have auctioned the world’s first negative-subsidy offshore wind farm.

/pdf/offshore-wind-competitiveness-in-mature-markets-without-26n9r92yuo.pdf

Offshore wind competitiveness in mature markets without subsidy

Building on models that represent inter-temporal constraints in the optimal production decisions for electricity generation, the paper analysis the resulting costs and their impact on prices during the day. We linearise the unit commitment problem to facilitate the interpretation of shadow prices. Analytic research gives insights for a system with one technology and numeric implementation provides results for the German power system. The model is expanded to a stochastic optimisation with recourse. The model is used to calculate the cost of wind uncertainty and the value of updating wind forecasts.

/pdf/modelling-dynamic-constraints-in-electricity-markets-and-the-49oxubnhr7.pdf

Modelling Dynamic Constraints in Electricity Markets and the Costs of Uncertain Wind Output

This paper quantifies the degree of market power in the German wholesale electricity market A fundamental model is used to derive competitive marginal cost estimators which are compared with observed electricity prices Marginal costs are calculated focusing on market fundamentals such as plant capacities, fuel prices, and load structures In addition, international power exchange and dynamic effects like start-up costs and hydro storage plant dispatch are incorporated The comparison of marginal costs and prices reveals significant market power in the German electricity market, mainly exhibited during peak periods Producer surplus is significantly increased by market power

https://www.econstor.eu/bitstream/10419/23154/1/Ewiwp043.pdf

Felix Müsgens

Papers

Quantifying market power in the german wholesale electricity market using a dynamic multi-regional dispatch model*

Economics and design of balancing power markets in Germany

Offshore wind competitiveness in mature markets without subsidy

Modelling Dynamic Constraints in Electricity Markets and the Costs of Uncertain Wind Output

Market Power in the German Wholesale Electricity Market