Lion Hirth

Lion Hirth
Neon Neue Energieökonomik GmbH

PhD

About

59
Publications
22,462
Reads
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3,614
Citations
Additional affiliations
September 2012 - present
Potsdam Institute for Climate Impact Research
Position
  • Researcher

Publications

Publications (59)
Article
Energy and climate policies are usually seen as measures to internalize externalities. However, as a side effect, these policies redistribute wealth between consumers and producers, and within these groups. While redistribution is seldom the focus of the academic literature in energy economics, it plays a central role in real world policy debates....
Article
Levelized costs of electricity (LCOE) are a common metric for comparing power generating technologies. However, there is qualified criticism particularly towards evaluating variable renewables like wind and solar power based on LCOE because it ignores integration costs that occur at the system level. In this paper we propose a new measure System LC...
Article
Full-text available
Is there a place for today's fossil fuel exporters in a low-carbon future? This study explores trade channels between energy exporters and importers using a novel electricity-hydrogen-steel energy systems model calibrated to Norway, a major natural gas producer, and Germany, a major energy consumer. Under tight emission constraints, Norway can supp...
Preprint
Full-text available
Electricity is a peculiar economic good, the most important reason being that it needs to be supplied at the very moment of consumption. As a result, wholesale electricity prices fluctuate widely at hourly or sub-hourly time scales, regularly reaching multiples of their average, and even turn negative. This paper examines whether the demand for ele...
Article
Full-text available
The European electricity industry, the dominant sector of the world's largest cap-and-trade scheme, is one of the most-studied examples of carbon pricing. In particular, numerical models are often used to study the uncertain future development of carbon prices and emissions. While parameter uncertainty is often addressed through sensitivity analyse...
Article
Full-text available
Despite the importance of evaluating all mitigation options to inform policy decisions addressing climate change, a comprehensive analysis of household-scale interventions and their emissions reduction potential is missing. Here, we address this gap for interventions aimed at changing individual households’ use of existing equipment, such as moneta...
Article
Full-text available
Frequency stability requires equalizing supply and demand for electricity at short time scales. Such electricity balancing is often understood as a sequential process in which random shocks, such as weather events, cause imbalances that system operators close by activating balancing reserves. By contrast, we study electricity balancing as a market...
Preprint
Full-text available
Is there a place for today’s fossil fuel exporters in a low-carbon future? This study explores trade channels between energy exporters and importers using a novel electricity-hydrogen-steel energy systems model calibrated to Norway, a major natural gas producer, and Germany, a major energy consumer. Under tight emission constraints, Norway can supp...
Preprint
Full-text available
The European electricity industry, the dominant sector of the world's largest cap-and-trade scheme, is one of the most-studied examples of carbon pricing. In particular, numerical models are often used to study the uncertain future development of carbon prices and emissions. While parameter uncertainty is often addressed through sensitivity analyse...
Preprint
Full-text available
Despite the importance of evaluating all mitigation options so as to inform policy decisions addressing climate change, a systematic analysis of household-scale interventions to reduce carbon emissions is missing. Here, we address this gap through a state-of-the-art machine-learning assisted meta-analysis to comparatively assess the effectiveness o...
Article
Full-text available
With the growth of wind and solar energy in electricity supply, the electrification of space and water heating is becoming a promising decarbonization option. In turn, such electrification may help the power system integration of variable renewables, for two reasons: thermal storage could provide low-cost flexibility, and heat demand is seasonally...
Article
Full-text available
The hydrogen economy is currently experiencing a surge in attention, partly due to the possibility of absorbing variable renewable energy (VRE) production peaks through electrolysis. A fundamental challenge with this approach is low utilization rates of various parts of the integrated electricity-hydrogen system. To assess the importance of capacit...
Preprint
Full-text available
With the growth of wind and solar energy in electricity supply, the electrification of space heating is becoming a promising decarbonization option. In turn, such electrification may help the power system integration of variable renewables, for two reasons: thermal storage could provide low-cost flexibility and heat demand is seasonally correlated...
Article
Since the 1990s, many developing countries have restructured their electric power industry. Policies such as breaking up, commercializing and privatizing utilities, allowing for independent power producers, installing independent regulators, and introducing competitive wholesale markets were meant to improve the industry's efficiency and service qu...
Article
Full-text available
Power system modeling is data intensive. In Europe, electricity system data is often available from sources such as statistical offices or system operators. However, it is often unclear if these data can be legally used for modeling, and in particular if such use infringes intellectual property rights. This article reviews the legal status of power...
Article
European Union competition law, intended to thwart subsidies paid out by national governments, plays an important role in shaping EU Member States’ support schemes for renewable energy. The Environmental and Energy State Aid Guidelines 2014–2020, which formalize the European Commission’s take on subsidies in the electricity sector, prescribe techno...
Article
Full-text available
The expansion of wind and solar power is creating a growing need for power system flexibility. Dispatchable power plants with CO2 capture and storage (CCS) offer flexibility with low CO2 emissions, but these plants become uneconomical at the low running hours implied by renewables-based power systems. To address this challenge, the novel gas switch...
Article
Full-text available
With electric heat pumps substituting for fossil-fueled alternatives, the temporal variability of their power consumption becomes increasingly important to the electricity system. To easily include this variability in energy system analyses, this paper introduces the “When2Heat” dataset comprising synthetic national time series of both the heat dem...
Article
Full-text available
Previous studies have noted that, unexpectedly, Germany’s dramatic expansion of wind and solar energy coincided with a reduction of short-term balancing reserves. This observation has been dubbed the “German Balancing Paradox”. This paper provides further and updated evidence: since 2011, wind and solar energy have nearly doubled while both reserve...
Preprint
Full-text available
The quality of electricity system modelling heavily depends on the input data used. Although a lot of data is publicly available, it is often dispersed, tedious to process and partly contains errors. We argue that a central provision of input data for modelling has the character of a public good: it reduces overall societal costs for quantitative e...
Article
Full-text available
Previous studies have noted that, surprisingly, Germany’s dramatic expansion of wind and solar energy coincided with a reduction of short-term balancing reserves. This paper provides further and updated evidence, supporting this “German Balancing Paradox”: since 2011 wind and solar energy nearly doubled while reserve requirements and reserve activa...
Article
Full-text available
Applied power system research is data intensive, often requiring hour-by-hour data on electricity consumption and generation as well as detailed information about technical and cost parameters of power stations. The European Union obliges firms to publish much of this information on a common website, the “ENTSO-E Transparency Platform” operated by...
Article
Full-text available
European wholesale electricity prices have dropped by nearly two thirds since their all-time high around 2008. Different factors have been blamed, or praised, for having caused the price slump: the expansion of renewable energy; the near-collapse of the European emissions trading scheme; over-optimistic power plant investments; a decline in final e...
Article
Full-text available
The global energy system is undergoing a major transition, and in energy planning and decision-making across governments, industry and academia, models play a crucial role. Because of their policy relevance and contested nature, the transparency and open availability of energy models and data are of particular importance. Here we provide a practica...
Article
Full-text available
Energy policy often builds on insights gained from quantitative energy models and their underlying data. As climate change mitigation and economic concerns drive a sustained transformation of the energy sector, transparent and well-founded analyses are more important than ever. We assert that models and their associated data must be openly availabl...
Article
Several studies have shown that the revenue of wind power generators on spot markets (‘‘market value”) diminishes with increasing deployment. This ‘‘value drop” is mostly observed in power markets that are dominated by thermal power plants, such as in Germany. This paper assesses the wind market value in power systems where hydroelectric stations w...
Article
Full-text available
Low-carbon electricity generation, i.e. renewable energy, nuclear power and carbon capture and storage, is more capital intensive than electricity generation through carbon emitting fossil fuel power stations. High capital costs, expressed as high weighted average cost of capital (WACC), thus tend to encourage the use of fossil fuels. To achieve th...
Article
With an increasing share of wind and solar energy in power generation, properly accounting for their temporal and spatial variability becomes ever more important in power system modeling. To this end, a high temporal resolution is desirable but due to computational restrictions rarely feasible in long-term models that span several decades. Therefor...
Article
Previous studies find that the economic value of electricity (USD/MWh) generated by wind power drops with increasing market share. Different measures can help mitigate the value drop, including electricity storage, flexible conventional plants, expansion of transmission, and demand response. This study assesses another option: a change in design of...
Article
Electricity is a paradoxical economic good: It is highly homogeneous and heterogeneous at the same time. Electricity prices vary dramatically between moments in time, between location, and according to lead-time between contract and delivery. This three-dimensional heterogeneity has implication for the economic assessment of power generation techno...
Article
Full-text available
Balancing power is used to quickly restore the supply-demand balance in power systems. The need for this tends to be increased by the use of variable renewable energy sources (VRE) such as wind and solar power. This paper reviews three channels through which VRE and balancing systems interact: the impact of VRE forecast errors on balancing reserve...
Article
Full-text available
This paper reviews the economics of solar power as a source of grid-connected electricity generation. It is widely acknowledged that costs of solar power have declined, but there is disagreement how its economic value should be calculated. Grid parity', comparing generation costs to the retail price, is an often used yet flawed metric for economic...
Thesis
Die Variabilität von Wind- und Solarenergie hat signifikanten Einfluss auf Stromsysteme und Elektrizitätsmärkte, sobald diese Technologien in signifikantem Maßstab Anwendung finden. Im weltweiten Durchschnitt erzeugen solche „variablen Erneuerbaren“ heute zwar nur 2.5% der elektrischen Energie, aber alle Prognosen weisen auf eine zunehmende Bedeutu...
Article
Accurate information about electricity generation and consumption is crucial to power system modelling. Several institutions publish such data: for European countries these include the association of system operators ENTSO-E, the EU body Eurostat, and the International Energy Agency; for Germany they comprise the sector organisation BDEW, the feder...
Article
The integration of wind and solar generators into power systems causes “integration costs” – for grids, balancing services, more flexible operation of thermal plants, and reduced utilization of the capital stock embodied in infrastructure, among other things. This paper proposes a framework to analyze and quantify these costs. We propose a definiti...
Article
The economics of electricity is shaped by its physics. A well know example is the non-storability of electricity that causes its price to fluctuate widely. More generally, physical constraints cause electricity to be a heterogeneous good along three dimensions - time, space, and lead-time. Consequently, different generation technologies, such as co...
Article
In order to explore scenarios on the future of power systems, a variety of numerical models have been developed. As the share of variable renewable energy sources, particularly wind and solar, is projected to significantly increase, accounting for their temporal and spatial variability becomes ever more important in developing sound long-term scena...
Article
Energy and climate policies are usually seen as measures to internalize externalities. However, as a side effect, the introduction of these policies redistributes wealth between consumers and producers, and within these groups. While redistribution is seldom the focus of the academic literature in energy economics, it plays a central role in public...
Chapter
In the wake of global climate change and increasing geopolitical instability of oil supply an accelerated transition to renewable energy system gets increasingly important, if not unavoidable. This book encompasses reports of select energy strategies as well as in-depth technical information of the already or potentially involved technologies. On...
Conference Paper
Control power (regulating power, balancing power) is used to quickly restore the supply-demand balance in power systems. Variable renewable energy sources (VRE) such as wind and solar power are often thought to increase the reserve requirement significantly. This paper provides a comprehensive overview of balancing systems in Europe, discusses the...
Article
Control power (regulating power, balancing power) is used to quickly restore the supply-demand balance in power systems. Variable renewable energy sources (VRE) such as wind and solar power are often thought to increase the reserve requirement significantly. This paper provides a comprehensive overview of balancing systems in Europe, discusses the...
Article
Balancing power (regulating power, control power) is used to quickly restore the supply-demand balance in power systems. Variable renewable energy sources (VRE) such as wind and solar power, being stochastic in nature, ceteris paribus increase the need for short-term balancing. Their impact on reserve requirements is heavily discussed in academic a...
Article
The integration of wind and solar generators into power systems causes “integration costs” for grids, balancing services, reserve capacity, more flexible operation of thermal plants, and reduced utilization of the capital stock embodied in infrastructure. This paper proposes a valuation framework to analyze and quantify these integration costs. We...
Article
This paper estimates the welfare-optimal market share of wind and solar power, explicitly taking into account their output variability. We present a theoretical valuation framework that consistently accounts for output variability over time, forecast errors, and the location of generators in the power grid, and evaluate the impact of these three fa...
Article
Full-text available
Die fluktuierende Stromerzeugung aus Wind und Sonne unterliegt regelmäßig Prognosefehlern und erhöht damit den Bedarf an Regelleistung. Basierend auf einem probabilistisch-analytischen Modell kann geschätzt werden, dass jedes zusätzliche Gigawatt an Solar- oder Windleistung den Bedarf an Regelleistung um 30-70 MW erhöht. Ein Blick in die Vergangenh...
Article
The integration of wind and solar generators into power systems cause “integration costs” for grids, balancing services, reserve capacity, reduced utilization of the capital stock, and more flexible operation of thermal plants. This paper proposes a market-based valuation framework to analyze and estimate these inte-gration costs. The framework exh...
Article
Full-text available
As part of its climate strategy, the EU aims at increasing the share of electricity from renewable energy sources (RES-E) in overall electricity generation. Attaining this target poses a considerable challenge as the electricity sector is "locked" into a carbon-intensive system, which hampers the adoption of RES-E technologies. Electricity generati...
Article
This paper provides a comprehensive discussion of the market value of variable renewable energy (VRE). The inherent variability of wind speeds and solar radiation affects the price that VRE generators receive on the market (market value). During windy and sunny times the additional electricity supply reduces the prices. Because the drop is larger w...
Article
The variability of wind and solar power crucially affects their social value. This paper determines the welfare-optimal market share of wind and solar power under different technology, price, and policy assumptions, focussing on the impact of variability. A numerical electricity market model with high temporal resolution is used to represent variab...
Article
The inherent variability of wind speeds affects the price the wind power generators receive when selling their output on the market (market value). During windy times the additional supply of electricity at zero marginal costs shifts the supply curve (merit-order curve) to the right and thereby reduces the equilibrium price. Because the shift is la...

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