Whole System Approach: Adjustment of incentive regulation to improve whole system optimisation

The central objective is to investigate a targeted adaptation of incentive regulation for better overall system coordination of the energy sectors. The starting point of the analysis are concrete use cases that can be assigned to the three levels of the WSA and thus to the central interfaces where a high need for coordination is to be expected. For these use cases, the project team investigates qualitatively and quantitatively which regulatory incentive problem exists and which incentive mechanisms and adjustments to the regulatory framework appear suitable to enable more efficient overall system coordination.

At the core of the analysis is the quantification of coordination benefits and existing regulatory disincentives based on the use cases. For this purpose, an electricity market and load flow model of the German electricity sector is used to compare the system costs of a coordinated and non-coordinated approach. The starting point of all use cases considered is the German transmission grid with existing structural bottlenecks in the German power system with a grid congestion.

A regulatory model is used to investigate the incentives of the grid operator resulting from the current Incentive Regulation Ordinance (ARegV). In this analysis, the transmission system operator (TSO) is seen as a possible coordinator who can, within the framework of the regulatory requirements and incentives, manage the overall system more efficiently for the use case under consideration in order to achieve a welfare improvement.