MELI

What does an optimal electricity system look like when demand, supply, and grids are thought of together, and what value does demand-side flexibility have in this?
How can renewable energies (RES) and storage be integrated efficiently into the electricity system?
And how is this influenced by changed regulatory frameworks or rising costs for grid expansion?

The EWI analyzes these relationships with its partial equilibrium model MELI (Modeling ELectricity Markets and Investments). The model optimizes the investments in generation and storage capacities required for cost-minimal demand coverage as well as dispatch decisions in a technologically detailed way and internalizes part of the grid infrastructure in doing so. A particular focus lies on the expansion of grid infrastructure and the quantitative assessment of overbuilding: MELI examines how grid expansion and a reduced sizing of the grid connection relative to the RES capacity affect social welfare.

Figure 1: Savings in grid investments versus curtailment losses through overbuilding of various asset configurations

MELI for Consulting and Research

The model offers a basis for decisions for project developers and political decision-makers and determines the efficient design of grid connections from an overall system perspective for various asset combinations of renewable energies and flexibilities.

MELI in Practice:

System optimization: identify the optimal ratio between grid expansion, flexibility deployment, and curtailment of generation peaks to minimize total costs
Regulatory assessment: analyze the influence of different grid-fee systems and construction cost subsidies on the sizing of the grid connection and the macroeconomic effects
Scenario comparison: compare the cost effects of alternative RES expansion and system development paths and break down the drivers of the fixed and variable system costs

MELI in Detail

MELI is a linear optimization model that minimizes the costs of covering electricity demand by modeling the required investments in generation and storage capacities as well as their deployment, taking into account fixed and variable operating costs. Investment and deployment are optimized jointly. A technological focus lies on the explicit representation of grid connection restrictions: the model determines how large the grid connection for various asset configurations (e.g. ground-mounted photovoltaics (PV) and onshore wind connected separately or jointly, with or without a battery) should be dimensioned from an economic perspective in order to ensure an efficient balance between grid costs and RES integration.

A differentiated spatial resolution is possible in order to identify both the influence of regional potentials for wind and solar energy and the characteristics of regional distribution grid structures on overbuilding decisions. For the distribution grid structures, MELI distinguishes between primarily load-oriented, balanced, or already saturated grid structures with high shares of renewable energies. Through a higher local resolution (e.g. ten German model regions), the intra-German transmission grid expansion between the regions can also be represented in addition to the distribution grid, as well as the exchange with neighboring countries.

Schematic Representation of the Model

The optimization is carried out on an hourly basis over one or more calendar years. MELI uses high-resolution weather and load time series to realistically capture the volatility of renewable energies as well as the flexibility requirements of the system (for example through batteries, decentralized flexibilities such as electric cars and heat pumps, or coupling with the hydrogen system). The model thus allows the assessment of market designs and grid cost scenarios in which the minimal cost burden for society is the priority.