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Regulatory Options for Local Reserve Energy Markets: Implications for Prosumers, Utilities, and other Stakeholders

Christiane Rosen and Reinhard Madlener

Year: 2016
Volume: Volume 37
Number: Bollino-Madlener Special Issue
DOI: 10.5547/01956574.37.SI2.cros
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Abstract:
While the share of fluctuating renewable energy resources is constantly increasing, the centralized, hierarchical organization of the current energy system and markets cannot adequately accommodate such decentralized electricity generation. New ideas have been developed and discussed for improved integration, also in Germany, one of the lead markets. Examples in this context are virtual power plants and microgrids. This paper presents a new local reserve energy market design (applied to residential households), which can facilitate the operation and allow trading within these constructs. Emphasis is put on the regulatory options and current market framework, mainly from a European and a German perspective, which serve as a basis for implementing the local market. It can be shown that using existing regulatory structures, a local market with simple rules (comparable to an "energy-eBay") can be easily installed.



The Economics of Demand-side Flexibility in Distribution Grids

Athir Nouicer, Leonardo Meeus, and Erik Delarue

Year: 2023
Volume: Volume 44
Number: Number 1
DOI: 10.5547/01956574.44.1.anou
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Abstract:
To avoid unnecessary distribution network investments, distribution tariffs are expected to become more cost-reflective, and DSOs are expected to procure flexibility. This will provide an implicit and an explicit incentive to provide demand-side flexibility. In this paper, we develop a long-term bi-level equilibrium model. In the upper level, the DSO optimizes social welfare by deciding the level of investment in the distribution network and/or curtailing consumers. The regulated DSO also sets a network tariff to recover the network and flexibility costs. In the lower level, the consumers, active and passive, maximize their own welfare. We find that implicit and explicit incentives for demand-side flexibility are complementary regulatory tools, but there are limits. If network tariffs are too imperfect, the resulting consumption profiles can become too expensive to fix with curtailment. We also find that it is difficult to set an appropriate level of compensation because of the reaction by prosumers.





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