Expanding Grids – But How?

The power grid is an important building block for the energy transition. The transmission grid transports electricity over long distances, for example, from wind power plants in the North Sea southern destinations. The distribution grid integrates decentralized power plants such as photovoltaics. However, the production of electricity from renewable energies depends on their location and the weather. This poses increasing challenges for the power grid. Short- and long-term storage facilities and the grid must be expanded to compensate for the volatility in renewable electricity supply.

However, there have been several obstacles to grid expansion up to now, such as protests against new electricity poles and lines near residential areas and lengthy approval procedures. The operation of storage facilities and plants that can flexibly consume electricity is also often not yet economical.

Another obstacle to an efficient energy transition is often the current regulation of the grids. As natural monopolies, their operators are controlled by the Federal Network Agency (Bundesnetzagentur). However, there is much debate about the specifics of the regulation. These have consequences for sector coupling, for example: if electricity is too expensive due to grid fees, it cannot be used economically in other sectors.

The EWI analyzes the market design and regulation of electricity grids from an economic perspective.

  • Regulation of distribution and transmission system operators
  • How grid fees are structured and work
  • Economics of concession allocation
  • How decentralized players in the energy transition can be coordinated

Economic Analyses of Regulation, Grid Fees and Market Design

In several research projects, the EWI analyzes the regulation of the electricity grid. These investigate, for example, the regulation of distribution and transmission system operators, but also the system of grid fees and the design of the electricity market. The EWI is working out theoretically, a possible specific structure, and quantitatively, the effects of regulatory changes.

The EWI uses its findings to support policymakers and industry on economic and strategic issues, such as the economics of concession allocation.

Economic Analyses of Decentralised Coordination Mechanisms

Decentralized coordination mechanisms are an essential component of the future energy system. These could be, for example, local (flexibility) markets to manage congestion in the grid or node-specific, time-variable electricity prices. However, there are still many questions as to the details of these decentralized coordination mechanisms. The EWI is researching the effects of various options on the behavior of market participants.

Modelling of Grids and Storage in Energy System Models

Which load flows are occurring in the German transmission grid? And what (node- or zone-specific) prices, generation, trading volumes, and efficient investments in power plants result from this? The EWI can calculate this with its SPIDER model. Grid restrictions can be taken into account in dispatch and investment modeling. Additionally, the EWI can determine the impact on future redispatch requirements. The model is based on a high-resolution DC load flow calculation of the German transmission grid and node-specific data on electricity demand, generation capacities, and RE availabilities.