Current Projects

Mobilising Endogenous Potentials for Structural Change – Decarbonisation in a Lignite Mining Region (DecarbLau)

Financed by: Federal Ministry of Education and Research

Cooperation: Chair of General economics and Chair of Management of regional energy systems at BTU Cottbus-Senftenberg, Halle Institute for Economic Research, Innovationsregion Lausitz, Institute for Ecological Economy Research (IÖW), TU Dresden

The project DecarbLau is a three-year research project funded by the Federal Ministry of Education and Research as part of the funding priority “Economics of Climate Change”.

The phasing-out of lignite based electricity production will affect the economic development of small regions in Germany. The political induced phasing-out of an important economic sector provokes the resistance from regional actors and state administrations. Using the example of the Lusatia region the research project considers the following question: How a proactive approach towards structural change can be implemented in a structurally weak region? Our working hypothesis is that additional governmental funding will only have a positive economic impact in the region, if there is sufficient endogenous potential, which can be transformed in to new economic structures. Since the regional innovation system is characterised by a small R&D workforce and a comparatively low number of patent declarations, these endogenous potentials need to be developed through appropriate policies.

Within the project, the Chair of Energy Economics quantifies the future employment development within the Lusatian lignite industry. The analysis distinguishes and quantifies direct and indirect employment effects. In order to determine the extent of the social consequences of a coal phase-out, the effects are assessed by model-based scenarios.

Better price forecasts in the energy sector by combining fundamental and stochastic models (ProKoMo)

Funding: Federal Ministry of Economic Affairs and Energy

Cooperation: Karlsruhe Institute of Technology - Institute of Operations Research (IOR) - Division Analytics and Statistics

The project ProKoMo is a three-year research project funded by the Federal Ministry for Economic Affairs and Energy. It is dedicated to the combination of fundamental models and stochastic models. The aim is to improve the forecasting quality of electricity price forecasts. Fundamental energy system models usually determine prices based on a detailed bottom-up analysis of the demand and supply side. On the one hand, they are able to depict real techno-economic interactions. On the other hand, they can barely account for stochastic influences. Therefore, probability statements about future developments are very limited. However, such probability statements can be well obtained from stochastic models. These contain by design stochastic innovations and / or error terms, from whose probability distributions, quantiles and variances, for example, confidence intervals of predictions can be derived.

By further developing, combining and interlinking the two model types (fundamental model and stochastic model), the project combines the advantages of both methodological approaches. The structural statements of the fundamental models should be preserved, but their predictions should be provided with distribution functions or probability statements. With the help of the improved price forecasts, the power plant deployment in the short term as well as investment decisions processes in the long term, are expected to become more efficient. This ultimately leads to a reduction of system costs and thus improves the economic efficiency of the energy system.

Leading the Working Group “Electricity Market Design” in the Project “Energy Systems of the Future”

Sponsor: Project Office “Energy Systems of the Future” supported by acatech – National Academy of Science and Engineering, the German National Academy of Sciences Leopoldina and the Union of the German Academies of Sciences and Humanities; financed by the Federal Ministry of Education and Research

Questions and tasks regarding the regulation and design of the electricity market are different today, compared e. g. to the process of the markets liberalization around the turn of the millennium. Therefore, the current energy and electricity market design needs to be adapted. Regarding the foreseeable challenges and considering recent records, the development of a new market design in the electricity sector must be reassessed fundamentally: Optimized energy market design is able to accomplish climate protection goals more efficiently and more effectively, achieve an improved integration of renewable energies and contribute to the security of supply. The Working Group focusses on market design questions up to 2030 and will show “options for actions” for framing the electricity market to fulfill the goal of decarbonizing the German energy system. For this purpose, work will focus especially on the European Emission Trading Scheme, the support of renewable energies, as well as interdependencies between the electricity market and other sectors, such as the mobility heat sectors.

Members of the Working Group (in alphabetic order): Dr. F.-D. Drake (innogy SE), Prof. Dr. O. Edenhofer (PIK), Dr. C. Growitsch (Fraunhofer IMWS / CEM), Prof. Dr. A. Moser (RWTH Aachen), Prof. Dr. W. Münch (EnBW), Prof. Dr. F. Müsgens (BTU), Prof. Dr. A. Ockenfels (Uni Köln), Dr. Dr. T. Paulun (EEX), Dr. K. U. Pritzsche (Linklaters), Prof. Dr. A. Wambach (ZEW), Prof. Dr. M. Weinhold (Siemens), Prof. Dr. H. Weyer (TU Clausthal)

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Correction and combination methods for forecasting to improve system integration of renewable energies (FOCCSI)

Cooperation and Funding: Federal Ministry of Economic Affairs and Energy

The project FOCCSI (Forecast Optimisation by Correction and Combination methods for System Integration) is a three-year research project funded by the Federal Ministry of Economic Affairs and Energy. It pursues the improvement of energy-related forecasts, such as the prediction of generated wind energy, over all time horizons. It thus contributes to the system integration of renewable energies into existing energy systems at the national and international levels. Therefore, better forecasts indirectly contribute to the achievement of the fundamental energy transition goals: They reduce dependence on energy imports, ensure affordable energy costs and make an important contribution to solving global climate problems.

Precise forecasts for the feed-in of fluctuating renewable energies and current electricity prices are key elements to the planning and control of power generation, grid operation and commercialization of electricity. The project FOCCSI is devoted to the research of efficient methods for predicting highly dynamic forecast variables, such as wind energy or electricity prices. The central research aspect is the development of statistical methods for the correction and combination of forecasts, which are used to generate superior meta-forecasts. Due to the generality of the investigated methods, they are also interesting for further applications.

Design of auctions for market premia for onshore wind generation: theoretical and experimental testing

Cooperation: CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute). CERGE-EI is a joint workplace of Charles University and the Economics Institute of the Czech Academy of Sciences

Deployment of renewable generation is essential for the reduction of carbon emissions to combat global warming and for the EU states to fulfill their legal obligations with respect to climate targets. Onshore wind generation plays a major role in this process. Renewable energy sources, including the relatively cheap onshore wind energy, will, however, need subsidies for at least another decade. Designing subsidy mechanisms that are efficient, effective, cheap, non-distortive and supporting innovation is thus an issue of key importance. The new mechanism of auctions for market premia is highly promising and will be implemented in Germany in 2017. However, there are important design issues that need careful consideration to assure that the new mechanism fulfills the objectives. The project focuses on applying theory of auctions and experiments to investigate relevant design issues. We especially focus on the issues of bidder commitment, bidder entry, bidder collusion, small bidder entry and the effect on innovation.

Completed Projects

Development of standardized load profiles based on measured load data

Principal: Distribution System Operator

Standardized load profiles (SLPs) are used for balancing and billing end consumers with an annual consumption less than 100 MWh. SLPs should represent typical consumption patterns of end user groups, e. g. households and commercial customers.

However, consumer behaviour and consumption structure change over time. In addition, regional characteristics of the supply area are often not sufficiently included. In this context the question arises, whether currently used SLPs still represent typical consumption patterns and what forecast accuracy they show.

The project involved the development of a methodology for updating and regionalising SLP. The methodology follows the BDEW classification, but extends it, by considering for example school vacations. This improved the profiles for commercial and household customers. A description and validation of the methodology can be found in the paper ‘How to improve standard load profiles: Updating, regionalization and smart meter data’, which was presented to a expert audience at the 14th International Conference on the European Energy Market (EEM) 2017.

Transformation Processes in the Sector of Energy Supply – Redefinition of Cooperative Model Communication Taking into Account Interactive Media Systems (E-Transform)

Cooperation and Funding: Federal Ministry of Education and Research

Project website:

The chair of Energy Economics participated in a three-year research project to analyse and improve the transmission of knowledge of the ‘Energiewende’, supported by the Federal Ministry of Education and Research. We collaborated with the University of Applied Sciences Augsburg and partners such as ‘Regionalverband FrankfurtRheinMain’ and ‘Europäische Metropolregion München’. The project developed a modular and multi-media based platform for knowledge which is geared to different lifestyles and target groups. The project also looked at the “Energiewende” from new perspectives. To test and apply new communication approaches for a knowledge transfer, a mediation kit including a ‘Serious Game’ had been developed.

Innovation Forum „Power-to-Heat“

By its program "Innovationsforen" the Federal Ministry of Education and Research supports the formation of networks, which are dedicated to experience a significant growth in the medium term.Within the framework of the "Power-to-Heat" (P2H) Innovation Forum the chair of energy economics in cooperation with the business consulting company HLP Dimler and Karcher enabled a networking of stakeholders from science, business and politics in the field of sectoral coupling by P2H with the aim of promoting technical and economic maturity of P2H applications. The process was accompanied by network and innovation management, public relations and analysis of the current (market) situation.

In the period from October 2016 to March 2017, overall 6 events on different P2H related topics took place, in which the topic was intensively analyzed from different perspectives. Three central themes have been emerged:

  • Innovations in products and marketing opportunities
  • Marketability of P2H plants in different business strategies
  • Design of the regulatory framework as a fair Level-Playing-Field

Major results of the project are documented in a short study.

Fundamental gas market analysis for a gas trading utility in a context of the German energy transition process.

Funding: Gas trade utility

Cooperation: r2b energy consulting GmbH

The project was oriented on provision of insights about future of European natural gas market with the purpose to improve the basis for strategic business decisions. The working packages were focused on the in-depth analysis of market mechanisms and main factors behind the gas prices and trade volumes evolution; on operation of key gas infrastructure elements (e.g. gas transportation networks, LNG liquefaction and regasification terminals, gas storage facilities); as well as on the mid-term gas price forecast.

The project involved development of the large-scale European gas market model and integration of it into business activities. Using the model as a support tool, our project partner can obtain necessary information needed to understand the mid- and long-term market trends and to form robust business decision vectors.

Power-to-Heat: Use of Excess of Electricity for the Production of Heat as Option to Integrate Renewable Energy

Cooperation and Funding: Federal Ministry for the Environment, Nature Conservation and Nuclear Safety

Within the project, the Chair of Energy Economics calculated potentials for the use of power-to-heat-systems in Germany. Power-to-Heat means to convert electricity into heat. It is a flexibility option which is technically feasible and comparably cheap. In periods of high renewable feed-in and cheap electricity prices it can be used as flexibility option. Storing the resulting heat may be an additional source of flexibility. The aim of the project was to identify technical, economic and political potentials of power-to-heat in Germany until the year 2020. Additionally, the market design was analysed and potential barriers identified

Main results of the project are the following: Power-to-heat is a ready-to-use flexibility option. There exists a various amount of technical applications for industrial purposes, district heat suppliers and households some of which do economically pay off while others do not. In the past, the market for negative control power was the most promising one. Due to an increasing competition in the market, there is an ongoing decrease in its prices. They are expected to remain on a low level until 2020. Hence, the economic situation has become more difficult during the last years. Taxes and fees on electricity consumption is a main reason why other fuels are preferred to electricity for heating purposes. However, within energy intensive industries there exists a wide range of exemptions concerning taxes and fees. Hence, for some firms the usage of electricity as a heat source may pay off due to savings of other fuels such as natural gas or oil.

Acceptance of heat supply concepts in Eberswalde

Principal: Energy supply company

A significant share of primary energy consumption in Germany is due to the heat demands of households, trade, commerce and services. For this reason, the heat market plays a decisive role within the process of energy transition and decarbonisation.

As part of the project “Zwanzig20-Forum Wärmewende”, heat supply concepts for certain neighbourhoods in Eberswalde were developed. In this context, the Chair of Energy Economics analyses various heat supply concepts with regard to stakeholder acceptance. The study reveals that consumers are interested in the design of their heat supply. Reliability and economic efficiency are the most important criteria. Furthermore, regional solutions, including the regional energy supply utility, achieve a high level of acceptance. With regard to technical configuration, solar heating systems and gas boilers are the technologies with the highest level of acceptance.

Analysis of standardized load profiles based on measured load data of residential and commercial customers

Principal: Distribution system operator

Standardized load profiles (SLPs) are used for balancing and billing end consumers with an annual consumption less than 100 MWh. SLPs should represent typical consumption patterns of end user groups, e. g. households and commercial customers.

The Chair of Energy Economics analysed the current profiles, real system load and measured data from a number of households and commercial customers. It became apparent that the standard profiles by BDEW possess systematic differences from real system load. The SLP could be improved via an aggregation of selected measured data.

Expertise for Designing Auctions for the Promotion of Renewable Energies

Cooperation and Funding: Bundesverband der Energie- und Wasserwirtschaft (BDEW)

With the fundamental reform of the Renewable Energy Act in 2014 the promotion of renewable energies in Germany is changed. In the future the price which will be paid for electrical power from renewable energy sources is determined by an auction system. After a pilot phase, restricted to the generation of electrical power of ground-mounted pv-systems, this applies to all newly installed renewable capacities starting from 2017. In this context the Chair of Energy Economics of the BTU Cottbus-Senftenberg, in cooperation with the r2b energy consulting GmbH, continued the successful work with the “Bundesverband der Energie- und Wasserwirtschaft” (BDEW) of the year 2014. This resulted in a further expertise, which served as basis for the BDEW recommendations for action. The expertise was focused on the development of an optimal design of technology specific auctions with respect to efficiency and effectivity, preserving simultaneously the diversity of market players. The detailed discussion was covering a variety of designing characteristics, for example the remuneration of electricity or capacity, the usage of a moving or a fixed market premium or the choice of the price rule.

Optimal Design of Auctions for Ground-mounted Photovoltaic Facilities

Cooperation and Funding: Bundesverband der Energie- und Wasserwirtschaft (BDEW)

In the amendment of the Renewable Energy Act in 2014 the government decided to determine the height of promotion for renewable energies by competitive auctions. In a pilot phase this project was restricted to ground-mounted photovoltaic facilities, however, in the medium term it should be applied to all renewable energies. For this purpose, the chair of energy economics developed an optimal auction design for ground-mounted photovoltaic facilities which was based on a choice of suitable criteria. The results were summarized in a report which was used by the BDEW to contribute to the political discussion. Central issues of the analysis were the intensity of competition, the pricing rule, the risks of the auction participants, and the realisation probability of projects. In addition, further aspects were considered, such as the conservation of the diversity of market players and a possible European harmonization of the renewable energies in the future.

Analysis of German Energy Policy from Brandenburg’s Perspective

Cooperation and Funding: Brandenburg Department of State

The integration of electricity from RES becomes increasingly difficult: Historically, a fluctuating demand was balanced by flexible thermal power plants on the supply side. Today, increasing generation from intermittent RES increases inflexibility on the supply side and thus affects security of supply. Moreover, an (unexpectedly) high amount of electricity feed-in from RES decreased profitability of thermal power stations significantly. To sustain their feasibility, mechanisms for capacity remuneration are discussed. The chair of energy economics supports the federal state of Brandenburg in developing positions concerning these and other topics in the context of the “Energiewende”. The activities comprise the organization and moderation of an expert panel as well as energy economic evaluations of different subsidy schemes and other market design issues. The project is a sequel of another project and thus continues a successful cooperation.

Opinion On the Economic Eligibility for Support of a Biogas Company

Cooperation and Funding: Department of State

The chair of energy economics compiled an advisory opinion on the economic importance of a company producing biogas. We analysed the company´s production concept as well as the market environment. A particular emphasis was given to the feasibility of biomass imports from neighbouring countries and risks and chances from potential changes in the regulatory framework.

Opinion on the Economic Potential of a Photovoltaic Company in Brandenburg

Cooperation and Funding: Department of State

In the context of the project the economic perspectives of a company producing and selling PV-modules was analysed. Both technical and economic potentials of the products as well as current and future market environment are investigated. Furthermore, factors changing the regulatory framework (especially in the EEG) and competing market participants are examined and compared to the situation in the company at hand.

Economic Analysis of Long-term Natural Gas Supply Contracts

Cooperation and Funding: Gas Distribution Company

The liberalization of the gas industry in Europe changed the basic conditions for the market participants. This also influenced the feasibility of natural gas supply contracts. The research project analyses long-term contracts concerning their characteristic components. Furthermore, the trading conditions at the time of the contract formation were compared with the current situation. Besides the economic feasibility, the diversification of risks between the contract partners was analysed. We find that historically, the supplier/exporter had the price risk while the consumer/importer took the volume risk. This changed after liberalisation of the gas market.

Consultancy project: ‚A Greenhouse Gas Neutral Germany until 2050’

Cooperation and Funding: German Federal Environmental Agency

Security of supply is a potential challenge in an energy system with high shares of renewable energy sources. Furthermore, with a lifetime of more than 30 years, most new power plant projects currently discussed will still be in operation in the year2050. Hence, new investments on the supply side are vital but will only happen optimally when incentives are rightly set. The project investigates the necessity of short-, medium- and long-term changes of the regulatory framework in the German market. One focus in the project is the examination of capacity instruments (capacity market or strategic reserve) to create investment incentives for fossil power plants. In particular, the project compared their respective advantages and disadvantages.

Influence of Intermittent RES on Open Pit Mining Processes – Analysis and Optimization

Cooperation and Funding: Utility Company

Lignite power plants used to be base load plants. This enabled constant lignite extraction in the mine as well as in coal transportation between mine and power plant. However, an increasing production of electricity from intermittent renewable energy sources decreases utilization of all thermal power plants. This effect can be observed both on a national as well as on a regional level, where grid restrictions within Germany have to be taken into account. The project analyses how much flexibility exists in lignite extraction processes, as well as in transportation between mine and power station and storage at the power station. In cooperation with the utility, we identified relevant factors, quantified flexibility potentials and suggested improvements to increase flexibility further.