Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/112279 
Year of Publication: 
2015
Series/Report no.: 
DIW Discussion Papers No. 1495
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
In Germany and beyond, various capacity mechanisms are currently being discussed with a view to improving the security of electricity supply. One of these mechanisms is a strategic reserve that retains generation capacity for use in times of critical supply shortage. We argue that strategic reserves have specific advantages compared to other capacity mechanisms in the context of the European energy transition. To date, however, the debate on capacity mechanisms has largely been restricted to national contexts. Against this background, we discuss the feasibility and potential benefits of coordinated cross-border strategic reserves to safeguard electricity supply and aid the energy transition in Germany and neighboring countries at large. Setting aside strategic reserve capacity which is deployed only in the event of extreme supply shortages could improve the security of electricity supply without distorting the EU's internal electricity market. In addition, overall costs may decrease when reserve procurement and activation are coordinated among countries, particularly if combined with flow-based market coupling.
Subjects: 
capacity mechanisms
strategic reserve
market design
energy policy
energy transition
JEL: 
D47
L51
Q48
Document Type: 
Working Paper

Files in This Item:
File
Size
659.57 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.