Magnus Energy Insights
Welcome to our December newsletter! As always, we are happy to shed some light on the European energy landscape, touching upon the latest regulatory and market developments as reported by the regulatory body ACER and an interesting project in Denmark by Energinet and Google to enhance flexibility using Granular Certificates. Plus, we talked to our technical expert Dr. Fei Wu, who works on energy modelling-based consulting after finishing her PhD at ETH Zürich.
ACER market monitoring report
On November 13th, EU Agency for the Cooperation of Energy Regulators (ACER) published its yearly report on EU market integration regarding wholesale electricity. This year, the report comes with a handy PowerBI dashboard. What are the key findings? And what are ACER's recommendations?
What is the report about?
Each year, ACER publishes this report to inform stakeholders of the status of the EU electricity market and its progress over the past year. Specifically, the report:
Evaluates progress in EU electricity market integration across all market-time periods (forward, day-ahead, intraday).
Highlights challenges in integrating balancing markets, developing forward markets, and the slow progress in implementing methodologies that define operations in day-ahead and intraday markets.
Outlines ACER's recommendations and ongoing efforts to improve electricity market efficiency, infrastructure investment and usage, and enhance flexibility through demand response
Contains a lot of insightful (and pretty!) visualisations
Please note that most data in the report refer to 2023, as 2024 is not over yet.
Key findings
The share of fossil fuel in electricity generation is diminishing, thanks to the expansion of renewable energy sources (RES). In 2023, the number of hours when generation was mostly RES increased by 10% (to reach 55%). ACER stresses the need to enhance power system flexibility for an efficient energy transition
Delays in implementing market design changes hinder flexibility. 27% of market design rules (methodologies, terms, and conditions) are delayed in terms of implementation.
Both average day-ahead prices and price volatility remained significantly higher than before the energy crisis
At the same time, the occurrence of both low and negative prices increased. "Very low" prices (i.e. <5 EUR/MWh) occurred more than 7000h (cumulative), compared to ~1200 in 2022 and ~1400h in 2019
Balancing market integration remained limited in 2023 (and the beginning of 2024)
Currently, electricity forward markets offer investors visibility on future prices for up to one year only, limiting long-term investment certainty. In 2023, ACER proposed improvements to long-term transmission rights (LTTRs) to strengthen forward markets and support the energy transition.
ACER recommendations
Increase integration and efficiency of the markets: update forward markets and balancing rule, introduce Power Purchase Agreements (PPAs)
Invest in smart grid solutions and make usage of existing infrastructure more efficient
Increase flexibility by encouraging demand response
Did you know our experts have published a series of reports on flexibility? For people who are newcomers, for DSOs, for TSOs, and regulatory bodies. Plese find them on our Insights section on the website.
Power by the Hour: Energinet Aims to Revolutionise Green Energy
As we seek smarter ways to manage green energy, a new trial in Denmark is testing how to match renewable energy production and consumption on an hourly basis. This trial is a partnership between Google, Better Energy, Flexidao, and Energinet, and uses a concept called Granular Certificates. The test exploits Denmark's significant renewable share and consumer information from smart meters.
Track and Trace, but not as you know it
Green energy production varies due to renewable intermittency and so does consumption if people consume flexibly. By matching the two on an hourly basis (the same time interval as is applied in market trading - for now), we can better address the fluctuating nature of the modern energy system.
Danish TSO Energinet will be using its Track & Trace platform to do a test run in December for Granular Certificates, which provide a more detailed and precise breakdown of the generation of renewable energy. During this test phase, Google will act as a consumer (with intelligence partner Flexidao) and Better Energy will act as the smart meter deployer. The test aims to provide more precise documentation of when and where green energy is produced and consumed, improving transparency, and enabling consumers to align their energy use with renewable availability.
Start as you mean to GO on
Documentation of production and consumption per MWh is already possible through Guarantees of Origin(GOs). Previous controversy surrounded GOs due to the issue of 'double counting' (when the same unit of energy is claimed more than once, creating a misleading representation of renewable energy usage).
Non-profit organisation EnergyTag is looking to tackle such issues by advocating for unified rules for granular certificates making them adaptable worldwide. This supports the Renewable Energy Directive (REDIII) by the European Union which aims to reduce greenwashing by mandating hourly matching of energy consumption data.
What is next?
The REDIII directive will be legally established in Denmark as of May 2025. This will facilitate the adoption of certificates to function as granular guarantees of origin. Should progress in this area continue to be made, then the viability of real-time certificates will be boosted as well as their potential to encourage more synchronized energy production and consumption.
If you want to know more
Read the EU Renewable Energy Directive III Summary [EU]
Take a look at the EnergyTag website
Listen to this podcast on Guarantees of Origin [Montel]
Dr. Fei Wu on the value and challenges of energy system modelling
This month, we catch up with Dr. Fei Wu. After finishing her PhD at ETH Zürich, she joined our technical advisory team. What is Fei working on as a technical expert? How can energy system modelling improve decision-making for system operators, policymakers, and energy suppliers? And what is it like to transfer from academia to consulting?
Can you tell us something about your PhD?
Sure, to put the 3.5 years in short, I built a “bridge” connecting energy transition and sustainability, which was rather isolated in the modelling field but very much interconnected in theory. This “bridge” is bioenergy – a renewable energy type that people love and “hate”. We love bioenergy, as it can be so versatile in handling almost all energy demand sectors (from power to aviation fuels). We “hate” bioenergy, as it might compete with land uses or food production, and it is so difficult to quantify how sustainable it actually is!
My PhD built a novel “bridge” to make policymakers from both sides happy – a land-free alternative bioenergy that can provide enough energy to reach the global warming target of 1.5C without compromising food system sustainability. We call this identified “win-win” situation an “option space”, which is extremely helpful to make system-wide decisions with well-informed synergies and trade-offs.
What kind of models are we talking about?
Following my favourite metaphor of the “bridge”, models are exactly the right tool to build it. Just like any successful engineer, we need the right tool for the right problem; sometimes one single tool is not enough. That’s why I integrate two cutting-edge models together – sector-coupled energy system optimisation modelling (Euro-Calliope developed at ETH Zürich & Delft University of Technology) and food system sustainability modelling (during my secondment at the Organic Institute of Switzerland, Research Institute of Organic Agriculture FiBL).
How can clients benefit from this?
Everyone likes to make well-informed decisions – knowing the price forecasting, cost-benefit, and even an “option space” of alternative solutions with synergies/trade-offs, can greatly facilitate decision-making.
For instance, when making large investments in new technologies (e.g., hydrogen infrastructure or battery storage), energy system modelling can help identify the optimal location/capacity to deploy considering the sector-coupling of power, heat, industry, transport, etc. As for the power market modelling, a good practical example would be forecasting the social-economic welfare and cost-benefit analysis of interconnectors, which we are working on.
Moreover, modelling could also identify new business opportunities/challenges by exploring the impact of future policies, e.g., by modelling the EU renewable energy target or national development plans.
How did you experience your transfer from academia to consulting?
I felt at home since I joined Magnus Energy, an international, young and energetic team. Also, working on practical projects that have a positive impact on the energy sector makes me feel tremendously motivated every morning when I wake up. It is just so much fun when you can be directly involved in the energy transition – something that I couldn’t do during my PhD time.
If you want to learn more about our energy system modelling services, do reach out to Fei Wu u. Or reach out to our partner Gertjan Meutgeert geert to discover even more technical advisory services.
Join our team
The Magnus Energy team is a mixed team with high ambitions. Do you want to be part of our top-notch team? Check out our vacancies here.
Please subscribe and join us for more newsletters next year!
Wishing you a very happy 2025,
The team of Magnus Energy
