Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/266022 
Year of Publication: 
2022
Series/Report no.: 
MAGKS Joint Discussion Paper Series in Economics No. 24-2022
Publisher: 
Philipps-University Marburg, School of Business and Economics, Marburg
Abstract: 
With an ongoing energy transition, the electric network is increasingly challenged. Handling congestion is a major responsibility of network operators. In recent years, market-based approaches to utilize network-supportive exibility, especially local exibility markets (LFMs), have been discussed as possible future development of congestion management processes. LFMs are a promising opportunity for the efficient, transparent and non-discriminatory integration of new exibility options, in particular demand-side exibility. Despite a wide body of supporting literature and several pilot implementations, there is still no common commitment to the concept of LFMs in the European Union. Here we address decision makers in the European energy economy, especially network operators, and discuss a possible exibility product design using a methodological approach with four steps. First, we review the theoretical background of LFMs, considering both network operators' views and the possibility of demand response as a exibility provider. Based on this review, we formulate an interim conclusion regarding requirements for exibility product design in general. Second, using an existing framework, we propose a concrete, capacity-based, long-term exibility product specification. Third, we discuss compliance between the defined requirements and the proposed product design to highlight the relevance of key design parameters and identify further research needs. Finally, we derive policy implications for network operators' decision makers regarding the implementation of LFMs.
Subjects: 
demand side flexibility
local flexibility market
congestion management
flexibility product design
JEL: 
D47
L94
Q41
Document Type: 
Working Paper

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