Effects of a Coal Phase-Out on Market Dynamics: Results from a Simulation Model for Germany

Abstract: Modeling power market dynamics is increasingly challenging, as both spatial and temporal imbalances of demand and supply are becoming more pronounced with higher shares of variable renewable energy (VRE). Therefore, a high-resolution spatial and temporal distribution of both VRE and conventional generation, as well as the load, is necessary for modeling the effect of policy measures on the electricity market. Besides, technical constraints must be considered in detail, as they fundamentally influence market outcomes. This contribution presents the results and findings from a power market simulation model for the case of the German market zone under different scenarios phasing out coal-fired power generation. It is shown that the developed spatially resolved model can realistically reproduce market outcomes and is, therefore, suitable for the analysis of future scenarios with increased VRE integration and reduced conventional generation capacity.