Energy Markets Part 2: Sustainable Transition
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Questions and Answers

What is the total area of the RWTH Aachen Campus?

800,000 m²

How many industrial research partners are currently involved in E.ON ERC?

About 120

What is the committed capital investment for the E.ON ERC?

€ 2,000,000,000

Approximately how many jobs have been created due to the E.ON ERC initiatives?

<p>10,000 jobs</p> Signup and view all the answers

What role does student exchange play in energy research networking?

<p>It promotes collaboration and knowledge sharing among students and researchers.</p> Signup and view all the answers

What is the main concern regarding rising energy demand in relation to fossil fuels?

<p>The main concern is that rising energy demand and limited supplies challenge the fossil fuel economy that underpins modern society.</p> Signup and view all the answers

How does unrestricted energy use contribute to environmental issues?

<p>Unrestricted energy use, including fossil and biofuels, significantly contributes to increasing levels of CO2 and other pollutants.</p> Signup and view all the answers

What market changes are necessary in a world with high shares of renewable energy?

<p>New market designs are needed to accommodate high shares of renewables, digitalization, and decentralization.</p> Signup and view all the answers

What does the term 'Prosumer' indicate in the context of energy?

<p>'Prosumer' refers to a paradigm shift towards active consumer participation in energy production and consumption.</p> Signup and view all the answers

What role does economic theory play in energy policy design?

<p>Economic theory should improve energy policy design by providing a useful 'Toolbox' of theories, models, and approaches.</p> Signup and view all the answers

What is the 'Energy Trilemma' and why is it important?

<p>The 'Energy Trilemma' involves balancing energy security, environmental sustainability, and economic growth, which highlights the need for regulation and reform.</p> Signup and view all the answers

Why is it important to understand energy efficiency and rebound effects?

<p>Understanding energy efficiency and rebound effects is crucial for implementing effective energy policies that minimize negative environmental impacts.</p> Signup and view all the answers

What potential negative consequences of energy use should be monitored?

<p>Negative consequences include pollution and ecological degradation, which can be managed through economic mechanisms.</p> Signup and view all the answers

What is demand response in the context of energy consumption?

<p>Demand response refers to the alteration of energy consumption levels in response to changing prices and incentives.</p> Signup and view all the answers

List two types of incentive-based programs for demand response.

<p>Direct load control and curtailable load services.</p> Signup and view all the answers

How can demand response contribute to system reliability?

<p>Demand response can serve as a balancing resource and assist in mitigating regulation and ramp constraints.</p> Signup and view all the answers

What environmental benefit arises from some demand response programs?

<p>They can lead to energy conservation, contributing to a low-carbon power system.</p> Signup and view all the answers

What role does demand response play in responding to contingency events?

<p>Demand response can be utilized to quickly adjust energy consumption in response to unforeseen events or system imbalances.</p> Signup and view all the answers

What does the market price in energy economics coordinate?

<p>The market price coordinates supply and demand in the energy market.</p> Signup and view all the answers

Define the term 'marginal production cost' in the context of energy supply.

<p>Marginal production cost refers to the cost incurred to produce one additional unit of energy.</p> Signup and view all the answers

What relationship does the inverse energy demand function indicate?

<p>The inverse energy demand function indicates the marginal willingness to pay or opportunity cost for energy.</p> Signup and view all the answers

Explain the concept of the 'energy policy trilemma'.

<p>The energy policy trilemma involves balancing competitiveness, security of supply, and environmental protection.</p> Signup and view all the answers

What role do eco-taxes play in energy policy?

<p>Eco-taxes are used to discourage environmentally harmful practices and promote renewable energy sources.</p> Signup and view all the answers

How do competition policies affect energy markets?

<p>Competition policies promote fair competition and prevent monopolistic practices in the energy sector.</p> Signup and view all the answers

What is the significance of strategic reserves in energy policy?

<p>Strategic reserves provide a safety net during supply disruptions, ensuring energy security.</p> Signup and view all the answers

What might be considered the main goal of innovation policy in energy markets?

<p>The main goal of innovation policy is to foster the development of new technologies to enhance energy efficiency and sustainability.</p> Signup and view all the answers

What is the primary objective of smart grids?

<p>To provide a transparent, cost-efficient, secure, robust, and sustainable energy supply.</p> Signup and view all the answers

How do smart grids utilize information and communication technology?

<p>They link and control intelligent generation devices, storage, appliances, and network equipment.</p> Signup and view all the answers

What characteristics define the operation of smart grids?

<p>Smart grids are characterized by transparency, cost-efficiency, security, robustness, and ecological sustainability.</p> Signup and view all the answers

What does the term 'flexibility options' refer to in the context of smart grids?

<p>Flexibility options refer to the capabilities of smart grids to adjust and optimize energy supply and demand.</p> Signup and view all the answers

Why is the integration of storage into smart grids important?

<p>It enables efficient energy management and ensures reliable energy supply.</p> Signup and view all the answers

What does the abbreviation 'IØ8303' refer to in the context of the lecture?

<p>It refers to a course on Energy Markets, specifically Part 2.</p> Signup and view all the answers

Who is the professor leading the lecture on Energy Markets?

<p>Prof. Dr. rer. soc. oec. Reinhard Madlener.</p> Signup and view all the answers

What is one of the critical components discussed in the lecture regarding energy transition?

<p>Flexibility options are highlighted as crucial for the sustainable energy transition.</p> Signup and view all the answers

How many students were enrolled at RWTH Aachen University during the winter semester of 2022/2023?

<p>47,078 students.</p> Signup and view all the answers

What type of engineering is mentioned alongside Energy Economics in the academic structure?

<p>Civil Engineering.</p> Signup and view all the answers

What does the abbreviation 'FCN' stand for in the context of RWTH Aachen University?

<p>It likely refers to a specific research center or department.</p> Signup and view all the answers

What is a key focus area of the lecture related to Energy Economics?

<p>Basics of Energy Economics.</p> Signup and view all the answers

What is the role of non-faculty staff mentioned in the university's demographic data?

<p>They support operational functions and contribute to academic environments.</p> Signup and view all the answers

What aspect of energy is directly linked to sustainability in the content?

<p>Sustainable Energy Transition.</p> Signup and view all the answers

What is one of the objectives of discussing flexibility options in the energy sector?

<p>To enhance the integration of renewable energy sources.</p> Signup and view all the answers

Flashcards

E.ON ERC

E.ON Energy Research Campus, located at RWTH Aachen Campus Melaten.

RWTH Aachen Campus

A university campus in Aachen, Germany, hosting the E.ON Energy Research Campus (ERC).

Industrial Research Partners

Companies collaborating with the E.ON ERC on energy-related research and development — up to 250.

Campus Size

The area of the RWTH Aachen Campus Melaten is 800,000 square meters.

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Capital Commitment (E.ON ERC)

Pre-commitment of 2 billion euros.

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Energy Markets

A system for buying and selling energy resources.

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Energy Economics

The study of how energy is produced, consumed, and priced.

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Sustainable Energy Transition

Shifting to cleaner and renewable energy sources.

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Flexibility Options

Methods to adapt to fluctuating energy supply and demand

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RWTH Aachen University

A prominent German research university.

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Introduction (Overview)

Initial explanations about the topic under consideration.

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Lecture 6a

Specific lesson in Energy Markets course.

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Energy Resource & Innovation Economics

Analyzing energy resources & their innovation.

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Winter Semester 2022/2023

Academic period from the start of Winter until Spring.

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Business & Economics

A field of study focused on business economics and related subjects.

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Fossil fuel economy

The current global economic system heavily reliant on fossil fuels (coal, oil, and natural gas) for energy.

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Energy Trilemma

The difficult choices policymakers face when balancing energy security, environmental sustainability, and economic viability.

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Renewable energy sources

Energy sources that are naturally replenished, such as solar, wind, hydro, and geothermal.

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Energy efficiency

Using less energy to achieve the same level of output or service.

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Rebound effect

Increased energy efficiency leading to a situation where energy consumption increases rather than decreases.

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Energy policy tradeoffs

The conflicts and compromises that arise when choosing between different energy policies due to competing priorities (sustainability, affordability, and reliability).

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Prosumer

An individual or entity both producing and consuming energy, often through renewable sources.

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Demand Response (DR)

Adjusting energy consumption levels and patterns based on price changes and incentives. This helps manage the grid and reduce peak demand.

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Incentivized DR Programs

Programs that reward people for adjusting their energy use, like offering financial incentives for reducing consumption during peak hours.

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Price-based DR Programs

Programs that use varying energy prices to influence consumption, like charging more during peak hours and less during off-peak hours.

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DR for System Reliability

DR helps maintain a stable energy system, especially when there's lots of renewable energy sources, by managing fluctuations and demand.

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Environmental Benefits of DR

DR can lead to energy conservation, resulting in lower carbon emissions and a more sustainable energy system.

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Smart Grid

An intelligent electricity supply system that integrates and controls devices like generators, storage, appliances, and network equipment using information and communication technology.

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Smart Grid Goal

To create a transparent, cost-efficient, secure, and robust energy system that is also sustainable and environmentally friendly.

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What does a smart grid include?

A smart grid includes interconnected and controlled elements like generation devices, storage, appliances, and network equipment.

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What is the role of communication technology in a smart grid?

Communication technology enables the linking and control of smart grid components, allowing for efficient and dynamic management of the energy system.

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Market price

The price at which supply and demand for energy are balanced.

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Energy supply function

A function that shows the quantity of energy that producers are willing to supply at various prices. It's essentially the marginal production cost.

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Energy demand function

A function showing the amount of energy consumers are willing to buy at different prices.

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Energy policy trilemma

The challenging situation where energy policies must balance competing goals of security, affordability, and environmental protection.

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Security of supply

Ensuring sufficient energy availability for a nation or region.

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Competitiveness

The ability of an energy sector to effectively compete in the market.

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Environmental protection

Minimizing the negative environmental impact of energy production and use.

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Marginal production cost

The additional cost incurred by producing one more unit of energy.

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Study Notes

Energy Markets (Part 2)

  • Lecture 6a: Introduction, Basics, Sustainable Energy Transition, Flexibility Options
  • Professor: Reinhard Madlener
  • Institution: RWTH Aachen University, FCN, and E.ON Energy Research Center

FCN at RWTH Aachen University

  • Faculty of 8
  • 557 Professors (as of Dec 31, 2022)
  • 47,078 Students (Winter Semester 2022/2023)
  • 260 Institutes
  • 6,264 Academic Staff (including externally funded staff)
  • 2,979 Non-faculty staff (including externally funded staff)
  • 472 Trainees and interns
  • Research Center: Energy Economics, Energy Resources, and Innovation Economics

FCN / E.ON Energy Research Center

  • Founded June 2016
  • Collaboration between E.ON SE and RWTH Aachen University
  • Four Institutes with 7 professors in the field of energy technology
  • Cooperation with two Associate Institutes (GGE and ISEA)
  • Research areas: energy savings, efficiency, sustainable power sources for urban environments (buildings, city quarters, energy systems, automation, and services)

E.ON ERC at RWTH Aachen Campus Melaten

  • Up to 250 industrial research partners (currently about 120)
  • Campus area: 800,000 m²
  • Capital pre-commitments: €2,000,000,000
  • New jobs created: approximately 10,000

AixPeriments in Energy Economics

  • Institute for Future Energy Consumer Needs and Behavior
  • Research in Energy Economics, and related fields

Energy Research Networking (student exchange)

  • Members include: IDEA League, NTNU, JARA, IAEE, SAEE, ETH, GGE, ISEA, and others

Intro Energy Markets Course (Part 2)

  • Selected Topics: Energy Demand, Market Reform, Energy Efficiency, Energy Rebound, Optimal Renewable Resource Extraction, Economics of Nuclear Energy, Balancing Markets, Real Options, Machine Learning, and Energy Finance
  • Course Purpose: Energy demand, limited supplies, fossil fuel reliance, CO2 and pollutant escalation, new market design, and digitalization
  • Research Focus: Growth in alternative energy sources, energy policy efficacy/inefficiency, and improved policy design using economic principles

Energy Market Mechanism

  • Market price coordinates supply/demand curves
  • Inverse energy supply function = marginal production cost
  • Inverse energy demand function = marginal willingness to pay/opportunity cost

Energy Policy Trilemma

  • Competition, Price control, Safety control, Trade policy, Strategic reserves, Security of supply
  • Includes Regulation, Eco-taxes, and Innovation policy along with Environmental protection
  • Triangle demonstrates conflicting policy priorities

Short-Term and Long-Term Effects on Energy Markets

  • Reduction in energy supply causes initial price increase
  • Long-term energy demand adjusts to the new price, resulting in a lower quantity demanded

Price Formation on Electricity Markets, Merit Order Curve

  • Variable costs of different energy sources, as a function of demand for electricity
  • Peak demand drives higher prices for fuel types (starting with coal, increasing to oil/gas)

Regulation and Reform of Energy Markets

  • Natural monopoly/related monopoly problems in energy supply
  • Two solution proposals: regulation or public ownership
  • Short-term perspective: quick fixes
  • Long-term perspective: major reforms are preferred
  • Textbooks on Energy Economics/Energy Economics and Governance/Natural Resource and Energy Economics

Sustainable Energy Transition (the 3Ds etc.)

  • It's not all about electricity
  • Many ideas but world needs solutions, soon

Targets for the German Energy Transition

  • Status Quo in 2020
  • CO2 reduction targets, nuclear phase-out schedule, Renewable Energy share
  • Energy efficiency reduction targets
  • Impact of COVID-19 on 2020 energy efficiency data
  • Technological shifts are depicted graphically over time
  • Evolution of nuclear policy, coal policy, and renewable policies
  • Projections on renewable energy source share

Variable Renewable Energy Sources (VRES)

  • Mainly onshore/offshore wind and solar energy
  • Challenges of high volatility in VRES output

Smart Grid Environment

  • Decarbonization, Decentralization, Digitalization, and Democratization
  • Challenges of integrating high shares of VRES into the existing electricity grid
  • Issues of capacity increase, volatility, and social acceptance

Flexibility Options

  • Demand response (DR), Strategic RES power curtailment, Enhanced conventional generation
  • Smart grids, Dynamic network reconfiguration, Microgrids, Network expansion planning
  • Energy storage systems (various technologies)
  • Ancillary services

Demand Response

  • Price-based programs to alter energy consumption
  • Incentive-based programs for direct load control, curtailable load services, and demand bidding/buyback programs

System Reliability Benefits for DR

  • Balancing resource to mitigate ramp constraints
  • Provide frequency control reserves
  • Respond to contingency events

Economic Efficiency Benefits for DR

  • Deferred capital expenditures for generation/transmission, lower wholesale electricity prices
  • Improved consumption efficiency with real-time pricing
  • Market-based VPP operations for service competition

Efficiency Benefits for DR

  • Consumer energy usage reduction
  • Incentives for energy-efficient technologies
  • Response through incentives to entice customers

RES Curtailment

  • Variable renewable power outputs depend on weather conditions, causing uncertainty
  • Potential for unforeseen demand-supply imbalances
  • Strategic curtailment justified by over-generation/oversupply, congestion, or flexible baseload generators

Smart Grids

  • Today's centralized grid vs. future bi-directional power flow grid
  • Decentralized generation approach
  • Cellular grid approach
  • Essential use of ICT
  • Transparent/efficient/secure operation/sustainable and ecological energy supply

Energy Storage Systems

  • Technologies (Batteries, Flywheels, CAES, etc.) for various capacity and time scales
  • Integration on the supply, demand, or network sides
  • Providing additional support and flexibility to the electrical grid

Sustainable Energy Transition (Summary)

  • Energiewende: a challenging but necessary task
  • Integration of high VRES shares causes challenges
  • System flexibility, technological solutions, estimations in cost and optimality, and regulation

Contact Information

  • Institute for Future Energy Consumer Needs and Behavior (FCN)
  • E.ON Energy Research Center
  • Address, Phone, and Email for Prof. Reinhard Madlener

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Related Documents

6a Introduction: Energy Markets (Part 2) PDF

Description

Dive into the fundamentals of energy markets with a focus on sustainable energy transitions in this second part of the lecture series. Learn about flexibility options and the role of innovative technologies in enhancing energy efficiency. This quiz is designed to test your understanding of the concepts covered in Lecture 6a by Professor Reinhard Madlener.

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