Congestion Management & System Operation
Redispatch costs running into the billions, growing congestion, and the debate over nodal pricing, bidding zones, and market-based redispatch shape congestion management today. At the same time, system operation is becoming ever more challenging amid increasingly complex congestion, while grid expansion fails to keep pace with renewables.
We advise transmission system operators, ministries, and ENTSO-E on congestion management, grid planning, and system operation — combining quantitative models, load flow analysis, and regulatory expertise. Recent work includes a congestion management review for ENTSO-E, grid-friendly batteries, and flexible demand in redispatch.
Lion Hirth is our lead on this topic.
Prof. Dr. Lion Hirth
hirth@neon.energy
+49 157 55 199 715
Enercity
2026
Agora Energiewende
2023
Elia / 50Hertz
2021
BMWi
2018
BMWi
2018
The Economics of Power Grids (EN) A comprehensive introduction to the technology, economics, operation, and regulation of electricity grids: from locational pricing and redispatch to network charges and dynamic grid fees. Designed for anyone who plans, operates, regulates, or uses electricity grids, from network operators to flexibility providers.
Congestion management review (ENTSO-E). With the rise of wind and solar energy, batteries, and electrification, grid congestion is a growing challenge for many TSOs. ENTSO-E’s report provides a comprehensive summary and evaluation of solutions for congestion management and system operation. We reviewed and discussed the study with TSO representatives from 20 European countries. 2025.
DataFlex (TSOs). Germany manages grid congestion through mandatory, cost-compensated redispatch, but fair compensation for flexible demand is hard to determine. Market-based redispatch is an alternative but invites baseline manipulation and inc-dec gaming. With Consentec, we help two German TSOs refine the auction and compensation rules and prepare deployment. 2025–26.
Regional wholesale prices (Enercity). Few energy policy questions are debated so fiercely as the split of the German bidding zone: the wholesale market is blind to grid congestion, leading to inefficient dispatch, costly redispatch, and distorted cross-border trade. For the utility Enercity, we delivered a study on the pros and cons of uniform, zonal, and nodal pricing. 2025. Report.
Synchronizing renewables with grids (dena). Germany’s rapid renewable expansion is driving up network costs. For the German Energy Agency dena, with Consentec, we design and evaluate policy options internalizing these costs and support the government’s goal of synchronizing renewable deployment with grid expansion without slowing the energy transition. 2025–26.
Locational signals (BMWE). Locational signals are essential to integrate the growing number of flexible consumers efficiently and to limit rising grid investment. They can come from spatially differentiated wholesale markets, grid tariffs, or investment mechanisms such as the EEG and a capacity market. For the German government, we develop and evaluate such instruments with Consentec. Ongoing.
Electricity grid planning (BMWE). With structural congestion and planned grid investments of some €600 billion, grid financing ranks high on Germany’s energy policy agenda. This large project, led by Consentec, supports the German government on network expansion planning; we advise on grid financing, cross-border cost sharing (CBCA), and network charge reforms. Ongoing.
PKNS (BMWK). The “Platform Climate-Neutral Power System” is Germany’s principal stakeholder forum for electricity market design. With our partners Guidehouse, Consentec, Fraunhofer ISI, r2b, and Öko-Institut, we provided scientific guidance to the economics ministry. Neon led the work package on locational signals, covering a bidding zone split and dynamic grid fees. 2023–24. Website.
Using instead of curtailing (Agora Energiewende). We supported Agora Energiewende, Germany’s leading energy think tank, on electricity market design, in particular regional dynamic network charges, developing a proposal for “using rather than curtailing” surplus wind power. 2022. Report.
Congestion Management Games (TenneT). Local flexibility markets are prone to strategic bidding. For TSO TenneT, jointly with Takon and ZEW, we assessed such markets game-theoretically, formally identifying optimal increase-decrease bidding strategies and mitigation measures. 2021–24. Paper.
Nodal pricing model (TSO). Nodal pricing reflects transmission constraints in locational prices, which requires detailed network modeling. For a European TSO, in a d-fine-led project, we developed a GAMS-based load flow model covering all of Europe to simulate locational marginal prices. 2021–22.
Dispatch Hubs (Elia / 50Hertz). Grid congestion is widespread in Europe, but splitting bidding zones is politically deadlocked, so Belgian TSO Elia proposed “dispatch hubs,” small flexible zones within existing ones. For Elia and 50Hertz, we assessed eight options to compensate parties in a hub and recommended cost-based payments, independent of bidding behavior, to limit gaming. 2020–22. Report.
Ehrhart et al. (2026): Congestion management games in electricity markets
Ehrhart et al. (2025): Analysis of a capacity-based redispatch mechanism
Eicke & Schittekatte (2022): Critical assessment of arguments against nodal prices