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Improving Congestion Management: How to Facilitate the Integration of Renewable Generation in Germany

In this paper the German congestion management regime is analyzed and future congestion management costs are assessed given a higher share of intermittent renewable generation. In this context, cost-based re-dispatching of power plants and technical flexibility through topology optimization are considered as market-based and technical congestion management methods. To replicate the current market regime in Germany a two-step procedure is chosen consisting of a transactional spot market model and a congestion management model. This uniform pricing model is compared to a nodal pricing regime. The results show that currently congestion can mainly be managed by re-dispatching power plants and optimizing the network topology. However, congestion management costs tend to increase significantly in future years if the developments of transmission as well as generation infrastructure diverge. It is concluded that there is a need for improving the current congestion management regime to achieve an efficient long-term development of the German electricity system.

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Energy Specializations: Electricity – Transmission and Network Management; Electricity – Local Distribution; Electricity – Policy and Regulation; Renewables – Policy and Regulation

JEL Codes:
D44 - Auctions
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
Q52 - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

Keywords: Electricity, Congestion management, Network modeling, Germany

DOI: 10.5547/01956574.34.4.4

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Published in Volume 34, Number 4 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.