Electricity – Key to the Energy Transition

Liberated electricity markets, new climate targets, more renewables – the European electricity system is undergoing fundamental change. Renewable energies make electricity “greener” – but also mean new challenges for electricity markets and grids.

Electricity from wind and the sun is generated in a decentralized manner. How much electricity is generated depends on the weather and is, therefore, more often forecasted incorrectly. With sector coupling, heat demand also influences the electricity markets, for example, through combined heat and power plants or heat pumps.

The EWI researches and analyzes German and European electricity markets and heating technologies.

  • How electricity prices will develop
  • Which power plants will generate electricity in the future
  • Which power plants are optimally deployed in which markets
  • How to evaluate power plant assets from an economic point of view
  • The role of power-to-x in the European heating market
  • Optimal household decisions on investments and deployment of heating systems

Analyses of the European Electricity Market

In the field of electricity, the EWI researches how the German and European electricity markets and wholesale electricity prices develop and which power plants are optimally deployed in which markets. The institute simulates the competition on day-ahead and balancing markets based on EWI’s model DIMENSION. This simulation enables scenario-based analysis of how electricity markets develop, for example, electricity capacities and generation or high-resolution price time series.

Downstream, the intraday market can also be simulated: with the help of historical forecast errors and the probabilities for power plant outages. In this way, all electricity markets can be analyzed, and both the power plant input and the resulting electricity prices for day-ahead, intraday, and balancing power can be calculated. Based on the derived electricity prices, power plant assets can be evaluated from an economic point of view: for example, with EWI’s model EASE, which flexibly optimizes different plants against electricity prices.

The Role of Power-to-X in the Heating Market

The role of power-to-X fuels in the European heating market is also being analyzed at the EWI, as is the competition between electricity-driven heating technologies and other flexibility options. Research takes place at the system and the individual level, for example, on optimal decisions by households on investments in and the use of heating systems.

In EWI’s model DIMENSION, the heat sector is mapped in detail with more than 70 heating technologies in 28 countries. In addition to pure district heating plants (such as central gas-fired heat pumps or pure boilers, differentiated by fuel), combined heat and power (CHP) plants that flexibly generate electricity and heat simultaneously are also modeled.

How Households Can Optimally Meet Their Heat Demand …

The EWI’s model COMODO can also be used to analyze individual households and their reaction to different price components such as variable grid fees. For this purpose, consumer classes are first clustered, for example, based on technical (e.g., electricity system, heating system, available roof area) and socio-economic characteristics (e.g., income, preferences). The representative households optimize their heat demand and their investments in technologies, such as PV modules, micro-CHP, heat pumps, electric mobility, and storage.

… and What Repercussions This May Have on the Electricity Market

In addition, the EWI investigates interactions between individual household decisions and the electricity market. For this purpose, individual households’ decisions are aggregated at the country level, and the COMODO and DIMENSION models are coupled with each other.

The EWI also offers short-term approaches such as analyzing the deployment sequence of conventional power plants (merit order) or tailored solutions for customers such as large electricity suppliers or public institutions.

Selected Publications & Projects