How Different Redispatch Mechanisms Perform in Markets with Flexible Loads

Worldwide, countries transition from high- to low-carbon energy systems to combat climate change. In the electricity sector, this transition typically involves moving from few central and controllable conventional power plants towards many decentral and less controllable renewable energy sources. After spot-market trading, Transmission System Operators typically use, among other measures, controllable power plants to relieve network congestion in zonal electricity markets in the form of redispatch. Given the decrease in the number of controllable assets, regulators need to reconsider which (new) market players may participate in redispatch in the future, e.g., flexible loads. To analyze different redispatch mechanisms in future electricity systems, in this paper, we compare three redispatch mechanisms without flexible loads as well as with flexible loads, i.e., supply-side-only redispatch and joint supplyand demand-side redispatch. The three different redispatch mechanisms considered in this paper are the common Cost-Based Redispatch and Counter Trading as well as a newly introduced Hybrid Redispatch. As performance indicators, we compare respective total system costs and local investment incentives for generators and consumers based on corresponding rents. Our results reveal that for including flexible loads in redispatch, regulators face a policy trade-off: With joint supply- and demandside redispatch, total system costs are lower compared to supply-side-only redispatch; however, joint supply- and demand-side redispatch comes with (i) opposing investment incentives for the supply- and demand-side and (ii) a high level of anticipation complexity of flexible loads under Counter Trading and Hybrid Redispatch