Energiewirtschaftliches Institut an der Universität zu Köln gGmbH

Institute publishes EWI Merit-Order Tool for power plant dispatch

Institute publishes EWI Merit-Order Tool for power plant dispatch

December 10, 2019 | How will the price of electricity change if power plants are shut down? How will rising certificate prices in European emissions trading affect the electricity market? And how profitable are gas-fired power plants given the current low natural gas prices?

The so-called merit order provides answers to these questions. It describes the order in which the power plants offered on the electricity exchange are used and is based on their marginal costs. Researchers of the Energy Economics Institute at the University of Cologne (EWI) have now developed a tool with which users can analyse and present the influence of political and market developments on the merit order of the German power plant park.

So sieht das neue EWI Merit-Order Tool aus.

Read the effects of cost changes with just a few clicks

“We developed this tool at EWI and wanted to make it freely available to the public,” says Fabian Arnold, Research Associate at EWI. “This is how we want to contribute to the public debate. Everyone – no matter whether students, scientists or practitioners from the energy industry – can see the effects of changed framework conditions on the merit order with just a few clicks and also read them off graphically.

The EWI Merit-Order Tool shows the merit order of the power plants on the electricity exchange and can be used to show the influence of individual parameters on the supply curve in an interactive way. Parameters are in particular fuel costs and emission certificate prices, but also include transport and other variable costs as well as emission factors and average failure probabilities of the power plants. By varying these parameters, both the merit order for specific situations and the average merit order for specific periods can be defined.

Die mittlere Merit-Order der konventionellen Kraftwerke (ohne EE-Anlagen) im Jahr 2018.

Possible topic complexes that can be processed with the EWI Merit-Order tool:

  • How do changed fuel prices or certificate prices influence the order of power plant units in the merit order – and the absolute level of marginal costs?
  • How do decommissioned or newly built power plants affect the merit order?

Such studies can serve the purpose of…

  • … to better understand the connections on the electricity market,
  • … to shed light on current and future business models for plant operators,
  • … to better understand the effects of policy measures on merit orders,
  • … to visualize the merit order in certain situations or time periods.