Alexander Zerrahn

A Greenfield model to evaluate long-run power storage requirements for high shares of renewables

We develop a dispatch and investment model to study the role of power storage and other flexibility options in a greenfield setting with high shares of renewables. The model captures multiple system values of power storage related to arbitrage, dispatchable capacity, and reserves. In a baseline scenario, we find that power storage requirements remain moderate up to a renewable share of around 80%, as other options on both the supply side and demand side also offer flexibility at low cost. Yet storage plays an important role in the provision of reserves. If the renewable share increases to 100%, the required capacities of power storage and other technologies increase strongly. As long-run parameter assumptions are highly uncertain, we carry out a range of sensitivity analyses, for example, with respect to the costs and availabilities of storage and renewables. A common finding of these sensitivities is that – under very high renewable shares – the storage requirement strongly depends on the costs and availability of other flexibility options, particularly on biomass availability. We conclude that power storage becomes an increasingly important element of a transition towards a fully renewable-based power system. Power storage gains further relevance if other potential sources of flexibility are less developed. Supporting the development of power storage should thus be considered a useful component of policies designed to safeguard the transition towards renewables.

Network Expansion to Mitigate Market Power: How Increased Integration Fosters Welfare

Lack of transmission capacity hampers the integration of the European electricity market, and thereby precludes reaping the full benefits of competition. We investigate the extent to which transmission grid expansion promotes competition, efficiency and welfare. This work proposes a three-stage model for grid investment: a benevolent planner decides on network upgrades, considering welfare benefits of investments through a reduction of market power exertion by strategic generators. These firms anticipate their impact on market clearing, in particular when lines are congested. To this end, we provide the first model effectively endogenizing the trade-off between costs of grid investment and benefits by reduced market power potential. In a three-node network, we illustrate three distinct strategic effects: firstly, by reducing market power exertion, network expansion can promote welfare beyond pure efficiency gains: optimally accounting for strategic generator behavior can push welfare close to a first-best competitive benchmark. Secondly, network upgrades entail a relative shift of rents from producers to consumers, and thirdly, they may yield suboptimal or even disequilibrium outcomes when strategic behavior is neglected.

Sowing the Wind and Reaping the Whirlwind? The Effect of Wind Turbines on Residential Well-Being

This paper investigates the effect of wind turbines on residential well-being in Germany, using panel data from the German Socio-Economic Panel (SOEP) and a unique, novel data set on wind turbines for the time period between 2000 and 2012. Using a Geographical Information System (GIS), it calculates the distance from households to the nearest wind turbines to determine whether an individual is affected by disamenities, e.g. through visual pollution. The depth of our unique, novel data set on wind turbines, which has been collected at the regional level and which includes, besides their exact geographical coordinates, their construction dates, allows estimating the causal effect of wind turbines on residential well-being, using difference-in-difference propensity-score and spatial matching techniques. We demonstrate that the construction of a new wind turbine in a treatment area of 4000 metres around households has a significantly negative impact on life satisfaction. Moreover, this effect is found to be of transitory nature. Contrasting the implicit monetary valuation with the damage through CO2 emissions avoided by wind turbines, wind power turns out to be a favorable technology despite robust evidence for negative externalities.

Power-to-Heat for Renewable Energy Integration: Technologies, Modeling Approaches, and Flexibility Potentials

Flexibly coupling power and heat sectors may contribute to both renewable energy integration and decarbonization. We present a literature review of modelbased analyses in this field, focusing on residential heating. We compare geographical and temporal research scopes and identify state-of-the-art analytical model formulations, particularly concerning heat pumps and thermal storage. While numerical findings are idiosyncratic to specific assumptions, a synthesis of results generally indicates that power-to-heat technologies can cost-effectively contribute to fossil fuel substitution, renewable integration, and decarbonization. Heat pumps and passive thermal storage emerge as particularly favorable options.

Coordinating Cross-Country Congestion Management

We employ a detailed two-stage model to simulate the operation of the Central Eastern European electricity market and network. Implementing different cases of coordination in congestion management between national transmission system operators, numerical results show the beneficial impact of closer cooperation. Specific steps comprise the sharing of network and dispatch information, cross-border counter-trading, and multilateral redispatch in a flow-based congestion management framework. Efficiency gains are accompanied by distributional effects. Closer economic cooperation becomes especially relevant against the background of changing spatial generation patterns, deeper international integration ofnational systems, and spillovers of national developments to adjacent systems.

On the economics of electrical storage for variable renewable energy sources

The use of renewable energy sources is a major strategy to mitigate climate change. Yet Sinn (2017) argues that excessive electrical storage requirements limit the further expansion of variable wind and solar energy. We question, and alter, strong implicit assumptions of Sinn’s approach and find that storage needs are considerably lower, up to two orders of magnitude. First, we move away from corner solutions by allowing for combinations of storage and renewable curtailment. Second, we specify a parsimonious optimization model that explicitly considers an economic efficiency perspective. We conclude that electrical storage is unlikely to limit the transition to renewable energy.