Energy Economics

• Energy Regulation: As the world aims to decarbonise and digitalise, regulated energy infrastructure, namely the electricity and gas networks, need to adapt to a changing environment. Most prominently, renewable electricity supply needs to be integrated into the networks. Regulation now needs to enable the development of the networks to deal with the new tasks while still maintaining incentives to choose economically efficient solutions. We developed a new regulatory approach, the output-orientated-regulation (OOR), which can be combined with the existing incentive regulation scheme, to improve incentives to further develop the network efficiently and effectively. We have developed this approach in different research projects and applied it in projects for German transmission network operators, such as TransnetBW and Amprion. 
• Market design: We work on potential changes in the energy market design to facilitate the transition towards a net zero economy. For example, in the dena pilot study “Towards Climate Neutrality”, we analyzed how so-called Carbon-Contracts for Differences (CCfD) could be applied to facilitate investments by the industry, faced with uncertain future CO 2 - prices, into carbon neutral production facilities. Furthermore, in different projects, such as enera, one of five SINTEG-projects, we evaluate how the market design could be adapted to allow network operators to use the potential flexibility of electric vehicles or small-scale battery storage to decrease the costs of network services. 
• Digitalization of the energy system: With the increasing digital connectivity of assets connected to the electricity network, from electric vehicles to industrial compounds, the economic framework needs to adapt. Prof. Brunekreeft headed up a working group called “Resilience of Digitised Energy Systems” at acatech, the National Academy of Science and Engineering. This working group focused on the opportunities and challenges for the electricity system arising from digitalization. The insights gleaned from the working group form the basis of a number of our research projects.

• enera (SINTEG-project): enera was a large demonstration project of a local flexibility market and the required digital solutions to facilitate this market. enera comprised 32 partners investing €175 million into the model region in the north of Germany. The Bremen Energy Research group coordinated the regulatory analyses in enera. 
• dena pilot study “Towards Climate Neutrality”: The study aimed to identify the key challenges to, solutions for and next steps on Germany’s path towards carbon-neutrality by 2050 with a specific focus on cross-sectoral approaches. Bremen Energy Research undertook the economic evaluation of different adaptations of the energy market design. We identified the key challenges in the given energy market design that impede decarbonisation across different sectors and discussed different approach - es to overcome these hurdles. 
• dena “Blockchain Machine Identity Ledger”: On behalf of the German Energy Agency (dena) our team at Bremen Energy Research, together with the IT experts from OFFIS and lawyers from Ernst & Young, scientifically evaluated different blockchain-based solutions. These solutions aim to include smart meters in a blockchain environment in order to connect digital identities with network users like battery storages or electric vehicles. Such connections would allow these assets to provide services to different markets in the future. The project was conducted in cooperation with 21 partners, including companies like SAP, EnBW and Deutsche Telekom and players in the digital sector and start-ups specializing in blockchain technology like the Energy Web Foundation. 
• Smart meter data management, flexibility markets, hydrogen and the future of natural gas infrastructure: In a long-lasting research cooperation our research group supports EWE NETZ in Oldenburg by developing analytical models to better understand different policy options to cope with the changing institutional environment in the energy sector. Within this cooperation we have focused on different issues, most recently on the potential regulation of hydrogen pipeline projects as well as the different regulatory options to cope with the phase-out of natural gas consumption by 2045 and the resulting challenges for a network operator.

During the reported time frame, our research group consisted of four to six people: a professor, post-docs and doctoral candidates. The group is 100% third-party funded, with roughly 50% public- and 50% industry-funded projects. The Ministry of Economics and Climate (BMWK) dominates public funding, while industrial funding comes from, for example, dena as well as energy companies.

• Brunekreeft, G., Buchmann, M., Kusznir, J. & Meyer, R., Shamsi, S. & von Bebenburg, C. (2021) Further developing incentives for digitalisation and innovation in incentive regulation for TSOs, report for TransnetBW, Stuttgart. 
• Palovic, M., Brandstätt, Chr., Brunekreeft, G. & Buchmann, M. (2022). Strategic behavior in market-based redispatch: International experience, The Electricity Journal Volume 35, Issue 3, April 2022, 107095. 
• Buchmann, M. (2020). How decentralization drives a change of the institutional framework on the distribution grid level in the electricity sector — the case of local congestion markets, Energy Policy Vol. 145, October 2020. 
• Brunekreeft, G., Kusznir, J. & Meyer, R. (2020). The emergence of output-oriented network regulation, Oxford Energy Forum, Issue 124, pp. 34-38. 
• Meyer, R., Brunekreeft, G. & Elias, G. (2020). TOTEX Malmquist Index for RPI-X Regulation: Does it Correctly Estimate the True Frontier Shift?, Journal of Regulatory Economics, Vol 58, pp. 78–97.