Market Failures in Local Flexibility Market Proposals for Distribution Network Congestion Management

R.J. Hennig; Simon H. Tindemans; Laurens De Vries

doi:10.1109/EEM54602.2022.9920980

Market Failures in Local Flexibility Market Proposals for Distribution Network Congestion Management

R.J. Hennig, Simon H. Tindemans, Laurens De Vries

Research output: Chapter in Book/Conference proceedings/Edited volume › Conference contribution › Scientific › peer-review

1 Citation (Scopus)

43 Downloads (Pure)

Abstract

The steady uptake of PV cells and high-power flexible loads such as electric vehicles (EVs) and heat pumps can lead to localized network congestion, if their power consumption or feed-in is not controlled well. One potential way that has been proposed to manage this congestion, are so-called Local Flexibility Markets. It is often argued, that these proposals are theoretically efficient, as they are market-based. However, some of these proposals may suffer from design flaws that allow market participants to obtain undue profits at the expense of the network operator. In this contribution, we discuss which kinds of market failures can occur based on theoretical reasoning and demonstrate them in a toy model. Based on this, we argue for a more careful consideration of congestion management options.

Original language	English
Title of host publication	18th International Conference on the European Energy Market, EEM 2022
Publisher	IEEE
ISBN (Electronic)	978-1-6654-0896-7
DOIs	https://doi.org/10.1109/EEM54602.2022.9920980
Publication status	Published - 2022
Event	European Energy Markets Conference 2022 - Ljubljana, Slovenia Duration: 13 Sept 2022 → 15 Sept 2022 Conference number: 18 https://www.eem22.eu/

Publication series

Name	International Conference on the European Energy Market, EEM
Volume	2022-September
ISSN (Print)	2165-4077
ISSN (Electronic)	2165-4093

Conference

Conference	European Energy Markets Conference 2022
Abbreviated title	EEM22
Country/Territory	Slovenia
City	Ljubljana
Period	13/09/22 → 15/09/22
Internet address	https://www.eem22.eu/

Bibliographical note

Green Open Access added to TU Delft Institutional Repository ‘You share, we take care!’ – Taverne project https://www.openaccess.nl/en/you-share-we-take-care Otherwise as indicated in the copyright section: the publisher is the copyright holder of this work and the author uses the Dutch legislation to make this work public.

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Market_Failures_in_Local_Flexibility_Market_Proposals_for_Distribution_Network_Congestion_ManagementFinal published version, 493 KB

Cite this

@inproceedings{a4bf60197064448eb199fbc109fd06da,

title = "Market Failures in Local Flexibility Market Proposals for Distribution Network Congestion Management",

abstract = "The steady uptake of PV cells and high-power flexible loads such as electric vehicles (EVs) and heat pumps can lead to localized network congestion, if their power consumption or feed-in is not controlled well. One potential way that has been proposed to manage this congestion, are so-called Local Flexibility Markets. It is often argued, that these proposals are theoretically efficient, as they are market-based. However, some of these proposals may suffer from design flaws that allow market participants to obtain undue profits at the expense of the network operator. In this contribution, we discuss which kinds of market failures can occur based on theoretical reasoning and demonstrate them in a toy model. Based on this, we argue for a more careful consideration of congestion management options.",

author = "R.J. Hennig and Tindemans, {Simon H.} and {De Vries}, Laurens",

note = "Green Open Access added to TU Delft Institutional Repository {\textquoteleft}You share, we take care!{\textquoteright} – Taverne project https://www.openaccess.nl/en/you-share-we-take-care Otherwise as indicated in the copyright section: the publisher is the copyright holder of this work and the author uses the Dutch legislation to make this work public.; European Energy Markets Conference 2022, EEM22 ; Conference date: 13-09-2022 Through 15-09-2022",

year = "2022",

doi = "10.1109/EEM54602.2022.9920980",

language = "English",

series = "International Conference on the European Energy Market, EEM",

publisher = "IEEE",

booktitle = "18th International Conference on the European Energy Market, EEM 2022",

address = "United States",

url = "https://www.eem22.eu/",

}

Hennig, RJ , Tindemans, SH & De Vries, L 2022, Market Failures in Local Flexibility Market Proposals for Distribution Network Congestion Management. in 18th International Conference on the European Energy Market, EEM 2022. International Conference on the European Energy Market, EEM, vol. 2022-September, IEEE, European Energy Markets Conference 2022, Ljubljana, Slovenia, 13/09/22. https://doi.org/10.1109/EEM54602.2022.9920980

Market Failures in Local Flexibility Market Proposals for Distribution Network Congestion Management. / Hennig, R.J.; Tindemans, Simon H.; De Vries, Laurens.
18th International Conference on the European Energy Market, EEM 2022. IEEE, 2022. (International Conference on the European Energy Market, EEM; Vol. 2022-September).

Research output: Chapter in Book/Conference proceedings/Edited volume › Conference contribution › Scientific › peer-review

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T1 - Market Failures in Local Flexibility Market Proposals for Distribution Network Congestion Management

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N2 - The steady uptake of PV cells and high-power flexible loads such as electric vehicles (EVs) and heat pumps can lead to localized network congestion, if their power consumption or feed-in is not controlled well. One potential way that has been proposed to manage this congestion, are so-called Local Flexibility Markets. It is often argued, that these proposals are theoretically efficient, as they are market-based. However, some of these proposals may suffer from design flaws that allow market participants to obtain undue profits at the expense of the network operator. In this contribution, we discuss which kinds of market failures can occur based on theoretical reasoning and demonstrate them in a toy model. Based on this, we argue for a more careful consideration of congestion management options.

AB - The steady uptake of PV cells and high-power flexible loads such as electric vehicles (EVs) and heat pumps can lead to localized network congestion, if their power consumption or feed-in is not controlled well. One potential way that has been proposed to manage this congestion, are so-called Local Flexibility Markets. It is often argued, that these proposals are theoretically efficient, as they are market-based. However, some of these proposals may suffer from design flaws that allow market participants to obtain undue profits at the expense of the network operator. In this contribution, we discuss which kinds of market failures can occur based on theoretical reasoning and demonstrate them in a toy model. Based on this, we argue for a more careful consideration of congestion management options.

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M3 - Conference contribution

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Market Failures in Local Flexibility Market Proposals for Distribution Network Congestion Management

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