DecentRalization of Electricity Systems – An Integrated Approach For Risk Assessment and Mitigation in the Energy Sector (REFRAME)

• Applicant: Professor Dr. Valentin Bertsch
• Subject Area: Operations Management and Computer Science for Business Administration
• Term: since 2025
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 548388828

Climate change mitigation and energy systems decarbonization are among the greatest challenges of humanity in the twenty-first century. Emerging as a long-term solution to the 2022 energy crisis, the 2023 plan to overhaul the EU electricity markets stands as a multifaceted and ambitious effort directed towards modernizing and enhancing energy supply in Europe. Nonetheless, decarbonization poses new challenges mostly when considering decentralized energy systems with increasing shares of variable renewable energy sources (vRES) and self-sufficiency, and their implications for achieving integrated and adaptive electricity markets. The uncertain future costs and societal acceptance of low-carbon technologies, coupled with the limited predictability of vRES and consumer behavior, pose significant risks for various market actors (generators, retailers, and consumers). These risks have the potential to influence price volatility and capital costs, and may have unintended distributional and welfare consequences. Yet distributional consequences have not been considered sufficiently in previous Social Sciences and Humanities (SSH) research addressing the low-carbon transition. It becomes thus relevant to advance the understanding of the possible relationships between citizens' engagement in electricity markets and welfare, and how these relationships can be embedded effectively in future policies. To overcome previous literature limitations, REFRAME will develop an integrated methodological framework to investigate the impact of decentralized energy systems and increasing self-sufficiency on the risk exposure of different actors within electricity systems and to propose risk mitigation solutions while considering consumer engagement and potential distributional consequences, mainly for vulnerable groups. By leveraging expertise in economic theory, energy system modeling, and behavioral and climate change economics, REFRAME will 1) evaluate the changing risk exposure of generators, retailers, regular consumers, and prosumers, together with possible risk mitigation options; 2) assess how feedback effects between these actors can affect their decision-making in the market and their risk exposure; 3) assess the distributional and equity implications posed by such risk and risk mitigation options. The French and the German energy systems will be compared. In addressing these main questions, this project aims to enhance the narrative on the meaning of a long-lasting consumer engagement in a low carbon economy, and the synergies and trade-offs that this engagement may create. REFRAME will thus strengthen SSH research by unveiling the impacts of the low-carbon transition across diverse socio-economic systems and actors.

• DFG Programme: Research Grants
• International Connection: France
• Partner Organisation: Agence Nationale de la Recherche / The French National Research Agency
• Cooperation Partners: Professorin Dr. Anna Creti; Professorin Dr. Marianna Russo