Evaluating regulatory measures in the German energy transition – A European multimodal market optimization approach including distributed flexibilities

The United Nations committed themselves to ambitiously reduce greenhouse gas emissions ensuring a deceleration of global warming [1]. These efforts have to be manifested in national (or European) law supporting energy efficiency, renewable energies and sector coupling [2]. Those regulatory measures are often applied using incentives, subsidies and resulting economical costs which can be rolled over in levies. The political challenge is to provide cost efficient interventions in order to reach the climate targets and corresponding constraints. This leads to a need for fundamental optimization models which allow an economic assessment of individual dispatch decisions and their systemic feedback. Fundamental models enable the evaluation of the power system’s sensitivity to interventions. Mathematical optimization delivers the framework for formulating rational decisions of entities within the power sector. Common fundamental models simplify distributed energy resources (DER), mainly wind and photovoltaics (PV), through heavy aggregation and usually define their dispatch decision exogenously in a preprocessing procedure due to complexity reasons [3]–[7]. The systemic feedback is therefore not considered adequately in decentralized generation. This distortion is inadmissible especially in energy systems with high levels of renewable energies that actively participate in the market. Detailed unit commitment models which can cope with conventional power stations but also a large amount of active dispatched decentralized renewable power plants enables more precise techno-economic evaluations. This paper delivers an approach to optimizing the interconnected European power system including all large scale (>10 MW) hydro-thermal power plants in the European energy system (covering all interconnected zones of European Network of Transmission System Operators for Electricity; abbr.: ENTSO-E). Furthermore a data set of 22 million individual buildings is used to model decentralized flexibilities and renewables bottom-up within Germany. The objective is to integrate userand technology-specific regulatory incentives into a bottom-up power system optimization with a high spatial resolution. This provides realistic conclusions by taking region-specific conditions into account. This paper’s objective is developing a methodical approach which is able to include highly spatial resolved distributed resources into a panEuropean unit commitment model. The applied regulatory framework focuses on German law. Nevertheless the approach can easily be applied to other legal environments.