Analysis and Modelling of the French Capacity Mechanism: Impact Assessment of Energy Policy Measures on the Security of Supply

141 Pages·2017·1.57 MB·English

by  Emil Kraft (auth.)

Emil Kraft
Analysis and Modelling
of the French Capacity
Mechanism
Impact Assessment of Energy Policy
Measures on the Security of Supply
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Emil Kraft
Analysis and Modelling
of the French Capacity
Mechanism
Impact Assessment of Energy Policy
Measures on the Security of Supply
With a foreword by Prof. Dr. Wolf Fichtner
Emil Kraft
Karlsruhe, Germany
BestMasters
ISBN 978-3-658-20092-3 ISBN 978-3-658-20093-0 (eBook)
https://doi.org/10.1007/978-3-658-20093-0
Library of Congress Control Number: 2017958028
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Acknowledgements
This master thesis was prepared in cooperation with the University Paris
Dauphine. Special thanks are due to Jan Horst Keppler (University Paris
Dauphine), Marie Petitet (EDF) and Olivier Houvenagel (RTE) for the hos-
pitability during my stay in Paris and the support in the preparation of my
master thesis.
Further, I want to thank Wolf Fichtner, Dogan Keles and Florian Zimmer-
mann for the supervision of my work. The chair for energy economics and
particularly the research group “Energy Markets and Energy System Anal-
ysis” provided an enjoyable and prolific working atmosphere in Karlsruhe
and gave me the opportunity to go to Paris for an academic exchange. Be-
ing always available for advice, they gave me trust and sufficient freedom
to prepare this work according to my own ideas.
Finally, I want to especially thank my family and my friends, who sup-
ported me throughout my entire studies and make my life worth living at
all times. My parents Ingrid and Dieter, who taught me not only working
ethic, but provided me a value compass throughout my entire life. My
brother Hagen, who shows me that blood is thicker than water and will
always support me in any way he is able to.
Vielen Dank!

Emil Kraft
Karlsruhe, May 2017
Foreword
The present work was prepared by Emil Kraft in the course of his studies
in "Industrial Engineering and Management" at the Karlsruhe Institute of
Technology and submitted on 30 May 2017 to the Chair of Energy Eco-
nomics. Mr Kraft has put great effort into his master's thesis, including a
stay at the University Paris-Dauphine and exchanging views with experts
from RTE and EDF in Paris. This is one of the reasons why the work is
convincing, both in terms of its disciplinary and interdisciplinary nature.
Mr Kraft has taken on a very important and topical issue for the efficient
organisation of the future European electricity system, namely the analysis
and modelling of the newly introduced capacity mechanism in France. In
particular, the master's thesis attaches great importance to the economically
and politically highly relevant and methodologically challenging topic of
analysing the effects of the new market segment on future investment de-
cisions and security of supply. In order to measure the development of the
French electricity system, Mr Kraft operationalises the energy policy ob-
jectives of economic efficiency and security of supply.
In order to model the capacity mechanism as a supplement to the existing
market structures, numerous further developments of the agent-based
power market simulation model PowerACE were required, which is used
to map short-term and long-term individual decisions at actor level and
thus simulate emergent behaviour at system level. The work is impressive
due to the level of detail of the modelling with regard to the regulatory
framework and the methodology employed by the author with regard to the
market logic in a capacity market. Unlike other publications dealing with
this subject, Mr Kraft has done both detailed modelling and applied the
developed methodology to real French data. This makes the work unique
in the scientific context.
viii Foreword
In addition to the thorough and detailed methodology, the work convinces
by a critical reflection of the simulation results taking into account the en-
ergy policy and regulatory conditions in the French market area. Further,
the interactions and dependencies between the electricity and capacity mar-
ket are described in detail.
In summary, I can strongly recommend this work to anyone interested in
current and future energy markets as well as the French electricity system,
regardless of having an academic or application-oriented background.

Professor Wolf Fichtner
Institute for Industrial Production (IIP), Chair of Energy Economics
Karlsruhe Institute of Technology (KIT)
Table of Content
Acknowledgements .................................................................................. v
Foreword by Prof. Wolf Fichtner ........................................................ vii
Table of Content ..................................................................................... ix
List of Figures ......................................................................................... xi
List of Tables ........................................................................................ xiii
Abstract .................................................................................................. xv
Zusammenfassung ............................................................................... xvii
1. Introduction ........................................................................................ 1
2. Overview French Electricity System ................................................ 3
2.1. Supply Side ................................................................................... 3
2.2. Demand Side ................................................................................ 7
2.3. France in the European Context ................................................. 11
2.4. Justification for a Capacity Remuneration Mechanism .............. 12
3. Decentralised Capacity Mechanism ............................................... 17
3.1. A market-wide quantity-based Mechanism ................................ 17
3.2. Presentation of Regulatory Framework ...................................... 19
3.3. Revisions requested by European Commission .......................... 36
3.4. First Market Results ................................................................... 39
x Table of Content
4. Modelling a Decentralised Capacity Market ................................. 41
4.1. Presentation of Agent-based Simulation Model PowerACE ...... 41
4.2. Necessity of a Capacity Mechanism in PowerACE ................... 45
4.3. System Boundaries and Input Data ............................................ 49
4.4. Logic and Implementation of the Capacity Mechanism
Model .......................................................................................... 50
4.5. State of the Art and own Contribution........................................ 70
5. Results and Sensitivity Analyses ..................................................... 93
5.1. Reference Case ........................................................................... 95
5.2. SoS+ Case................................................................................. 102
5.3. SoS- Case ................................................................................. 104
6. Critical Reflection and Outlook .................................................... 109
6.1. Determination of Mechanism Parameters ................................ 109
6.2. Security of Supply Evaluation .................................................. 112
6.3. Demand Adaption ..................................................................... 112
6.4. Cross-Border Participation and Market Coupling .................... 113
6.5. Nuclear Power Plants ............................................................... 114
6.6. Diversification of Bidding Strategies ....................................... 116
7. Conclusions ..................................................................................... 119
List of References ................................................................................ 123