Installed conventional and RE power plant capacity and total demand curve (reference scenario).

Installed conventional and RE power plant capacity and total demand curve (reference scenario).

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We explore the impact of renewable energy under free market conditions on the security of energy supply using data for the German electricity market. We design a fundamental electricity market model, where renewable energy capacity is not driven by expansion goals, but is dynamically modeled as an economically-driven investment option. Furthermore,...

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... subsection presents the projection of the electricity market based on our dataset. This projection is used as our reference scenario in the subsequent policy analysis. Fig. 1 shows the projection of installed capacity. It can be seen that projected conventional and RE power plant capacity exhibit little fluctuation between 2016 and 2022. There are hardly any investments in new capacity and the majority of decommissionings are due to power plants reaching the end of their life cycle. In 2022, the NPV ...
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... the first nine years, CO 2 emissions amount to around 250 Megatons per year. From 2025 onwards, the merit order effect of RE (and the resulting displacement of conventional power plants) lead to an almost complete elimination of carbon emissions (see Fig. ...
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... exceeds demand, redundant power plants are not allowed to offer their capacities on the market. Based on this allocation of production capacities, the profitability of power plants is again modeled by utilizing the LDCM (see Section 3.1.1). By assumption, conventional power plants are subsidized (and are not decommissioned due to losses). Fig. 12 demonstrates how the development of conventional power plant capacity in the regulated RE adaptation policy scenario differs from the regular market designs applied in the previous scenarios. There are now considerably more gas and oil power plants in the market. Compared to other conventional power plant technologies (such as lignite ...
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... 80,000 1,00,000 1,20,000 1,40,000 1,60,000 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Installed mechanism. Over the entire period under consideration, there is always sufficient supply to meet demand. Through the planned phasing out of nuclear energy, carbon emissions rise until 2022 (see Fig. 13). After that, emissions decline and lie between approximately 125 and 210 million tons per year (originating primarily from the operation of CO 2 -intensive lignite power plants in the market). The observed decrease of emissions during the last years of our investigation (between 2031 and 2035) is attributed to an increase in RE supply ...
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... emit little CO 2 ). While the German Federal Government [53] has decided on phasing out nuclear energy (and this has been incorporated in the simulation), this policy scenario allows for the possibility of investments in new nuclear energy in the future in case of demand shortages (as those depicted in the reference scenario, see Section 3.1.3). Fig. 14 shows the monetary costs associated with this scenario; from 2023 onwards, subsidies support RE through the FIT mechanism, and later on (after 2027) also base load power plants (e.g. lignite and hard coal) that run losses. This is because the RE adaptation design gives preference to medium or peak load power plants, which are better ...
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... 2016 to 2022, the development of power plant capacity in the freemarket RE adaptation policy scenario is similar to the regulated RE adaptation scenario (Fig. 15). However, due to the assumption that RE competes in the free market, the NPV optimization results in large investments in wind energy in 2023. This additional wind energy leads to the merit order effect, by which the electricity price drops to almost zero; as a result of this, and after five years of operation and consecutive losses, ...
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... conventional power plants dominating energy production between 2016 and 2022, annual CO 2 emissions lie between approximately 200 and 250 million tons (Fig. 16). The high wind energy investments in the following years lead to the displacement of conventional power plants, with CO 2 emissions dropping close to zero. In 2028 and 2034, all RE power plants are decommissioned for economic reasons, which gives rise to a temporary increase in carbon emissions (from conventional power plants). In the ...
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... rise to a temporary increase in carbon emissions (from conventional power plants). In the free market RE adaptation policy scenario, we assume that RE power plants participate in the free market and become decommissioned when running sustained losses for a period of 5 consecutive years. For this reason, there are no subsidies directed to RE. As Fig. 17 demonstrates, conventional power plants, however, need substantial subsidies from 2029 onwards. This is due to all conventional power plants sustaining economic losses due to the merit order effect of RE. While this effect consecutively leads to decommissionings of wind power plants in 2028, conventional power plants remain in the ...
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... average external costs per MWh produced for each generation technology based on data from Krewitt and Schlomann [58] [63]. These external costs are then multiplied by the production volumes of the corresponding power plant technologies in each policy scenario. Table 2 provides an overview of the external costs that we assumed for our simulations. Fig. 19 and Table 1 show that the total external costs of the five policy scenarios are in the range between approximately €46 and 78 billion. The market conditions for RE are a defining factor behind these differences. Both in the standard and in the regulated RE adaptation policy scenario, where RE is subject to an FIT mechanism, the costs ...

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... The German biogas industry is undergoing a transition, emphasizing electricity production and the declining sale of biomethane as a fuel [95]. Recent years have witnessed a substantial cost reduction in wind and solar energy, aligning with Germany's commitment to renewable energy [96]. The country's shift towards a tendering system and economic competitiveness in renewable energy contribute to its mainstream adoption [97,98]. ...
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... Based on duality theory, we can derive the day-ahead and real-time nodal prices under CED and SED, respectively, from the CED problem (1-2) and the SED problem (3). The detailed derivations are provided in Appendix A. We can then derive the mathematical expressions of the profit of conventional generators, the profit of renewable generators, and the market surplus, under both CED and SED, in Appendix B. It is remarkable that if the dispatch decisions of CED and SED are supposed to be identical, the differences in their expressions of those three performance metrics are shown as (5). ...
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... Some electricity market modelling studies considered a free market condition for renewable electricity generation in recent years. For instance, Coester et al. (2018) modelled the expansion of renewable electricity as an economically driven investment option in Germany, contrasting with other approaches that consider the policy-based expansion goals as the driving factor. In their modelling approach, they also analysed the effect of five policy scenarios on the future of the electricity market to secure the supply. ...
... There are also some other approaches to model prices. For example, [12] uses a load duration curve and merit order approach to evaluate the economics of renewable expansion, but this approach may not be very well suited when there is increased amounts of storage in the system. ...
... We then provide a path forward for a quick-ramping power plant investment (i.e., coal and LNG plants) to reach the pressing GHG emissions reduction goal. VRE expansion has led to incremental shifts in the energy system, namely the adoption of batteries [31], implementation of Power-to-X production (e.g., hydrogen) [32e35], and changes in market structures [36], The next step is factor in all these gradual changes and aggregate their net effects to examine the long-term impacts they will bring into the energy system. Due to the fact that Korea has four distinct seasons, this is of utmost importance to comprehend Korea's seasonally varying demand curve and to investigate its monthly fluctuating supply from VRE assets. ...
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... With the ongoing complex energy transition from high-carbon towards low-carbon systems and an increasing share of renewable energy sources (RES), a stable operation of the electricity system is at risk [10][11][12]. While RES such as wind and solar photovoltaics (PV) allow for a more sustainable generation of electricity and are therefore a means to combat climate change [13], they are, however, also highly variable [14]. ...
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