• Electricity grids in a sustainable energy system: implications for the governance (working title)

  • Doctoral student:Klaas Korte
  • Doctoral advisor:Prof. Dr. Erik Gawel
  • Start date:May 2012

Abstract

The electricity market in Germany so far has been characterized by rather centralized and little volatile generation, with generators being located close to the consumer sites. Consequently, the existing German electricity grid is aligned to this generation structure. These features create a path dependency that is likely to act as an obstacle for the energy sector’s transformation towards a sustainable energy provision on the basis of renewable energies. Therefore, the implementation of the German “Energiewende”, i.e. a change of the generation structure, and a decrease of energy demand, will require an adjustment of the existing infrastructures to the new electricity market design, which must be accompanied by a significant redesign of the electricity grid. Like the grid structure itself, the governance of the grid sector has developed historically and thus is aligned to a centralized and steady energy generation framework. This raises the question whether the existing governance system is suitable to meet the challenges of the new energy sector’s objectives.

The aim of this research is to investigate from an economic point of view what the design and role of the electricity grid shall be like in a sustainable energy system and of which kind the institutional framework must be to reach this state. The basic issue is how to govern trade-offs in the grid sector (for example cost-efficient generation far from the consumer site vs. little necessity for grid extension, competition in generation vs. low network costs, etc.) in a way that a sustainable energy supply can be ensured. To this end, the existing institutional arrangement and some alternatives will be analyzed by means of law and economics as well as new institutional economic methods. The results obtained will serve for the development of context-related guidelines for a sustainable governance of the electricity sector, providing the opportunity to derive recommendations for the German context.