Effects of a Coal Phase-Out on Market Dynamics: Results from a Simulation Model for Germany

TL;DR

This paper introduces a high-resolution simulation model for the German power market to analyze the impacts of phasing out coal, considering spatial, temporal, and technical constraints, and demonstrates its effectiveness in realistic scenario analysis.

Contribution

The paper presents a detailed, spatially resolved power market simulation model capable of analyzing future scenarios with increased renewable energy and reduced coal capacity.

Findings

Model accurately reproduces market outcomes under different scenarios

High-resolution spatial and temporal data improve scenario analysis

Model is suitable for assessing policy impacts on electricity markets

Abstract

Modeling power market dynamics is increasingly challenging, as both spatial and temporal imbalances of demand and supply are becoming more pronounced with higher shares of variable renewable energy (VRE). Therefore, a high-resolution spatial and temporal distribution of both VRE and conventional generation, as well as the load, is necessary for modeling the effect of policy measures on the electricity market. Besides, technical constraints must be considered in detail, as they fundamentally influence market outcomes. This contribution presents the results and findings from a power market simulation model for the case of the German market zone under different scenarios phasing out coal-fired power generation. It is shown that the developed spatially resolved model can realistically reproduce market outcomes and is, therefore, suitable for the analysis of future scenarios with increased VRE integration and reduced conventional generation capacity.