Economic and climate effects of increased integration of the Nordic and German electricity systems

Ea Energy Analyses, in collaboration with DTU Management Engineering Systems Analysis division, participated in the joint project of Agora Energiewende and Global Utmaning concerning the integration of Nordic and German electricity systems. The purpose of this project was to assess and discuss the resulting economic and climate effects of increased integration.

For this project, two analyses were conducted: A quantitative analysis of the power systems and market integration and a qualitative study of the macroeconomic impact.

Ea Energy Analyses and DTU were responsible for the quantitative analysis. As a starting point, proper scenarios were defined to determine input parameters for the market integration simulation. For each scenario, the effects of additional interconnection capacity between Germany and the Nordics were studied.

The project assessed electricity market prices, generation and trade flows in Germany, the Nordic and other affected countries. In addition, an assessment of overall costs was made, e.g. grid investment, as well as benefits resulting from fuel and CO2 cost savings and greenhouse gas emissions. Finally, the impact on national welfare, changes in consumer and producer surplus, interconnector congestion rents and system welfare were discussed.