As a boutique consultancy, Neon works on eight clearly defined topics.
Economics of wind & solar energy
The market value of wind and solar power – their $/MWh revenue from spot markets – tends to decline as deployment increases. We have quantified this “value drop” for different jurisdictions in a range of projects and explored possibilities to mitigate the value drop.
The design of wholesale and retail power markets determines the incentives to produce and consume electricity. Good market design leads to efficient investments and operation, bad market design to wastefulness and – in the extreme – to blackouts. We have worked on power market design in various projects.
Europe’s zonal electricity markets are blind for network constraints within bidding zones. TSOs use congestion management measures such as redispatch to avoid line overload. Neon has lead a large project on market based redispatch for the German government and has published an influential paper on Inc-Dec-Gaming.
(Whole) System costs
Wind- and solar-based power generation fluctuates, is subject to forecast errors, and requires grid expansion. The related costs are called “system costs“. Neon has done qualitative and quantitative studies of system costs.
Balancing power is used to quickly restore the supply-demand balance in power systems. The need for this tends to be increased by the use of wind and solar power. Neon provides expertise on balancing power, based on empirical studies and sound economics.
Power market modeling
We model wholesale electricity markets using EMMA. EMMA simultaneously models (hourly) dispatch and (yearly) investments in power plants. It calculates the capacity mix as well as hourly prices, generation, and cross-border trade for each market area. We use EMMA for studies and help our clients to use EMMA, an open-source model, themselves.
Open Source / Open Data
Big Data has reached the energy sector: policy making and investment decisions rely increasingly on large-scale statistical and numerical models. These models are data-intensive. We deliver such data to clients and support them building up a modern data infrastructure.
We train analysts and decision makers in Power Markets and Energy Economics, providing both introductory seminars for people new in the field as well as in-depth workshops on current economic and policy issues. In our seminar on “Electricity System Modeling” we offer an introduction into the world of numerical modeling of power systems in Excel and GAMS.