Auctions and Pricing for Utilization and sizing of capacity in Distribution Networks
With new consumer-bound technologies in distribution grids, the question that emerges is how to manage distributed loads and capture the potential to optimize utilization and sizing of the grid. Network charges signal network cost to users, but currently mainly serve to finance the infrastructure. The challenge is to guide network users via incentives. The aim of this research is to analyze auctions for capacity as an alternative or complement to regulated pricing. Efficient utilization and sizing of the grid, i.e. short- and long-term efficiency, are the main criteria. Hence, the research question is: how can well-designed auctions increase short- and long-term efficiency? Related sub-questions are: Which auction design and auction products are particularly promising for grid capacity? Under which circumstances are auctions more efficient than regulated prices? – How can auctions be combined with prices to improve efficiency altogether?
Thus, the proposed research contributes a formal analysis of auction designs for allocating and developing distribution network capacity. It will reveal strengths and weaknesses of auctions in the context of distribution grids with flexible users. The research also compares auctions with regulated pricing, aiming to establish which approach (or combinations thereof) can be most efficient under the given circumstances.