Final event "EOM-Plus": Analysis of the short- and medium-term effects of smart markets

The Department of Energy Systems Engineering of the Institute for new Energy Systems (InES) of THI, together with the Friedrich-Alexander University Erlangen-Nuremberg (FAU) and Stiftung Umweltenergierecht (SUER), held a joint workshop in Berlin to mark the conclusion of the EOM-Plus project. The research consortium presented the results of 3.5 years of intensive cooperation and discussed necessary further developments in the field of congestion management together with 30 experts from academia and industry.

As an introduction, the project leader Prof. Uwe Holzhammer (THI) (also representing the fellow FAU Prof. Veronika Grimm who was prevented from attending) welcomed the interested participants and explained the basic research objectives of the project. In the current electricity market design, bottlenecks in the power grid are steadily increasing in the context of the transformation of the energy system, which also greatly increases the costs for congestion management. Flexibility potentials, which are currently available (or will grow significantly in the next few years), can counteract this, but are not mobilized efficiently in the current market design. This is where the "Smart Market" approach comes in. As a market-based instrument for congestion management, smart markets are temporary markets limited to the duration of the network congestion and regional markets limited to the affected network area. These markets offer local financial incentives for voluntary grid-serving adjustments of flexibilities and can thus contribute to the resolution of congestion. Smart markets are positioned ahead of regulatory congestion management, which enables integration into the current electricity market design. As part of the joint project, the effects of this approach on the German electricity market were quantified and a possible implementation was evaluated in terms of energy legislation.

The scientists Tanja Mast (THI) and Lukas Lang (FAU) then presented the basic methodology for modeling smart markets as part of the German electricity market. The coupling of the multilevel electricity market model (FAU) and the detailed techno-economic smart market model (THI) allows both the analysis of systemic effects (system costs, RES curtailment, congestion volume, CO2 emissions) and the investigation of regional, technology-specific effects (smart market activity, scale of flexibility integration, additional revenues). The results of this analysis show that smart markets, if designed appropriately, offer benefits at the system and actor level. In addition to reducing RES curtailment (or congestion volume in general), CO2 emissions, and system costs, smart markets provide regional price signals that can be used to incentivize grid-serving adjustments of flexibilities. Business models for flexibilities could thus be extended by a further use case. The evaluations show that the benefits of smart markets strongly depend on their parameterization (upper cost limit, minimum impact factor). A general trade-off between cost efficiency and the integration of maximum flexibility potential can be observed.

Subsequently, Dr. Johannes Hilpert (SUER) presented the results of the energy legislation studies. The results show that the EU's internal electricity market regulation does not stand in the way of the introduction of a smart market, but rather requires it. The current regime of exclusively regulatory congestion management is only possible by invoking an exceptional clause (reason: strategic bidding). Since the cause of the exemption must be actively countered, it can be expected to expire in the medium term here. Under national legislation, smart markets are considered a "market-related measure" within the meaning of Section 13 (1) Sentence 1 No. 2 EnWG and are therefore compatible with the current regulatory framework. However, the priority of smart markets over regulatory congestion management should be defined by means of a clarification clause. Adjustments would also have to be made in the area of incentive regulation for transmission system operators in order to put costs for smart markets on an equal footing with the current costs for congestion management.

Intensive discussions on the integration of the concept into the current market design debate and on the implications of the results for the implementation of the approach rounded off the event.

The EOM-Plus research project was funded by the Federal Ministry of Economics and Climate Protection (BMWK) as part of the 7th Energy Research Program. The project was coordinated by Projektträger Jülich (PtJ).