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

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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 languageEnglish
Title of host publication18th International Conference on the European Energy Market, EEM 2022
ISBN (Electronic)978-1-6654-0896-7
Publication statusPublished - 2022
EventEuropean Energy Markets Conference 2022 - Ljubljana, Slovenia
Duration: 13 Sep 202215 Sep 2022
Conference number: 18

Publication series

NameInternational Conference on the European Energy Market, EEM
ISSN (Print)2165-4077
ISSN (Electronic)2165-4093


ConferenceEuropean Energy Markets Conference 2022
Abbreviated titleEEM22
Internet address

Bibliographical note

Green Open Access added to TU Delft Institutional Repository ‘You share, we take care!’ – Taverne project 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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