Heading towards democratic, sustainable and competitive electricity systems

Abstract

:The electricity system is virtually world-wide undergoing significant changes. In this context the following issues are important: (i) More and more customers become interested in contributing to their own electricity supply and to switch to “prosumagers” and /or join renewable energy communities (RECs). (ii) This trend is supported especially by the emergence of decentrally applicable technologies such as PV, small hydro and wind power plants and accompanying use of battery storage; (iv) energy energy communities have emerged focusing on using local electricity generation on a decentral level; (iv) These developments lead on the systems side to a need for “back-up” capacity (incl. storage) and demand-side flexibility; (v) Finally a new tariff system for end users is needed reflecting the value of energy and power feeded in and taken out of the grid at every point of time. This process is currently under way in many European countries and in California. And in these countries also a change in the principle how prices come about is already under way. A major reason for this development is that in recent years the electricity generation from variable renewable energy sources (VRES) especially from wind and photovoltaic (PV) power plants increased considerably. The major objective of this paper is to analyze and provide insights on how to bring about a competitive, sustainable and democratic electricity system with even higher shares of VRES in an economically balanced system but without escalating political interventions. It is triggered by the current discussion on how to integrate large shares of variable RES but the fundamental intention goes beyond that. It is to show how to head towards real democracy and sustainability in electricity systems, retaining at the same competition in the system and including all dimensions such as generation, storage, but especially the customer side. This is a challenge for all countries world-wide. Methods:Our method of approach is based on the following principles: (i) Crucial is coverage of residual load (= difference between final electricity demand and generation provided by non-flexible electricity generation); this is modeled on an hourly base over a calendar year based on assumed variable RES generation and development of the load profile; (ii) Deduction of available conventional and backup capacities including must-run (iii); consideration of flexibility on the demand-side based on consumer and RECs behavior incl. flexibility instruments such as batteries etc.; (iv) hourly electricity prices equal to short-term marginal costs and scarcity rents.