{"id":6145,"date":"2026-07-15T11:48:39","date_gmt":"2026-07-15T10:48:39","guid":{"rendered":"https:\/\/neon.energy\/?page_id=6145"},"modified":"2026-07-21T17:24:31","modified_gmt":"2026-07-21T16:24:31","slug":"electricity-markets","status":"publish","type":"page","link":"https:\/\/neon.energy\/en\/electricity-markets\/","title":{"rendered":"Electricity Markets"},"content":{"rendered":"

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Electricity Markets<\/h1>\n

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Capacity mechanisms, contracts for difference, the EU electricity
\nmarket reform: the design of European power markets is being
\nrenegotiated on many fronts at once. High wind and solar shares,
\nrecurring price spikes, and political interventions raise the question
\nwhether energy-only markets still set the right investment signals.<\/p>\n

We advise ministries, regulators, grid operators, and companies on
\nmarket design, capacity mechanisms, and forward markets \u2014 through
\nstudies, expert reports, and courses. For the German government, we have
\nrecently worked on capacity markets, demand flexibility, and locational
\nprice signals.<\/p>\n

Lion Hirth is our lead on electricity markets.<\/p>\n

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\"Prof.<\/p>\n

Prof. Dr. Lion Hirth
hirth@neon.energy<\/a>
+49 157 55 199 715<\/a><\/p>\n

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Reports<\/a><\/h2>\n

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\n\"Marginal<\/a><\/p>\n

Marginal pricing
Eurelectric \u00b7 2026<\/span><\/p>\n

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\n\"Regional<\/a><\/p>\n

Regional wholesale prices
Enercity \u00b7 2026<\/span><\/p>\n

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\n\"Price<\/a><\/p>\n

Price spikes
50Hertz \u00b7 2025<\/span><\/p>\n

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\n\"Cross-border<\/a><\/p>\n

Cross-border forward markets
TSOs \u00b7 2024<\/span><\/p>\n

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\n\"Electricity<\/a><\/p>\n

Electricity market reform
European Parliament \u00b7 2023<\/span><\/p>\n

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\n\"Electricity<\/a><\/p>\n

Electricity market design
IEA-RETD \u00b7 2016<\/span><\/p>\n

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Executive Education Courses<\/a><\/h2>\n

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Electricity Markets.<\/strong> An in-depth overview of how electricity markets function in practice, combining economic theory, regulation, and industry experience: from price formation and day-ahead auctions to balancing and capacity markets. Designed for professionals who trade, regulate, analyze, or design electricity markets across the power sector.<\/p>\n

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Grundlagen der Energiewirtschaft.<\/strong> Eine kompakte Einf\u00fchrung in Energie- und Netzwirtschaft sowie den politisch-regulatorischen Rahmen. Der Kurs vermittelt ein grundlegendes Verst\u00e4ndnis von Stromsystem, Marktmechanismen und Regulierung. F\u00fcr Berufs- und Quereinsteiger bei Energieversorgern und Netzbetreibern sowie in Projektentwicklung und Energiepolitik.<\/p>\n

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>> More details<\/a><\/p>\n

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Project References<\/a><\/h2>\n

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Marginal pricing (Eurelectric).<\/strong> The debate about marginal pricing and the \u201cmerit order\u201d has flared up again, with policymakers proposing wholesale interventions echoing the \u201cIberian Mechanism.\u201d For the industry association Eurelectric, we produced a short study benchmarking prices against other markets, explaining marginal pricing, and debunking key merit-order misconceptions. 2026. Report<\/a>.<\/p>\n

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Austrian electricity market design (multi client).<\/strong> The rapid transformation of the power system keeps raising new market design questions. For Austrian renewable energy associations, we ran workshops on current topics in electricity market design, such as system-friendly operation and capacity markets. 2025\u201326.<\/p>\n

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Price spikes (50Hertz).<\/strong> Episodes of extremely high power prices have raised concerns about capacity withholding. For TSO 50Hertz, we evaluated the economic causes of extreme prices, including whether plant operators withheld capacity to artificially inflate them, and developed practical recommendations to prevent future price spikes and mitigate their effects on consumers. 2025. Report<\/a>.<\/p>\n

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Electricity surplus (trading house).<\/strong> Rapid renewables growth with insufficient curtailment raises the probability that the day-ahead market fails to clear \u2014 the case when supply exceeds demand even at \u2212500 \u20ac\/MWh. For a trading house, we developed a model forecasting the probability of such events. 2025.<\/p>\n

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EU electricity market design (BMWE).<\/strong> European legislation shapes electricity markets, and more change is coming. This Consentec-led project provides support and advice for Germany\u2019s energy ministry in upcoming EU electricity market negotiations, from support schemes to grid fees and capacity mechanisms. The goal: the cornerstones of a decarbonized EU electricity market. Ongoing.<\/p>\n

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Capacity market (BMWE).<\/strong> After a political decision to introduce a capacity market, this multi-year project develops such a market for Germany\u2019s economics ministry. It examines options from a hedging obligation to a central capacity market. Consentec coordinates the overall project with r2b and \u00d6ko-Institut; we lead the work on hedging obligations. 2024\u201326.<\/p>\n

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Cross-border forward markets (TSOs).<\/strong> European TSOs issue long-term transmission rights, and ACER has proposed numerous changes, including the establishment of a virtual hub. In a report for the German TSOs, we developed an analytical framework for cross-border forward markets and evaluated these proposals. 2023\u201324. Report<\/a>.<\/p>\n

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Electricity market reform (European Parliament).<\/strong> The 2023 EU electricity market reform sparked debate over CfDs, PPAs, price caps, and peak shaving. Together with Bruegel, we assessed the reform proposals for the European Parliament\u2019s ITRE committee, based on a quantitative model of contractual arrangements, and derived recommendations. 2023. Report<\/a>.<\/p>\n

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Revenue cap implementation (BNetzA).<\/strong> Germany\u2019s energy regulator was tasked with implementing the revenue cap on power generators. Along with Frontier Economics, we provided economic expertise. 2023.<\/p>\n

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Electricity market design (utility).<\/strong> The EU market design reform raised strategic questions for power producers. We supported a European utility with analytics and assessments, focusing on offshore wind topics such as CfD design and transmission access guarantees. 2022\u201323.<\/p>\n

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EU electricity market design (BMWK).<\/strong> In this multi-year project for Germany\u2019s economics ministry, we advised on EU electricity market reform and crisis response. With Consentec, Neon co-led the consortium (with Fraunhofer ISI, r2b, SUER), headed the core market-design work package, and shaped Germany\u2019s position on Fit-for-55 and emergency measures, opposing harmful price interventions. 2021\u201324.<\/p>\n

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>> All project references<\/a><\/p>\n

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Academic Publications<\/a><\/h2>\n

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Hirth (2013): The market value of variable renewables<\/a>
\nHirth & Ueckerdt (2013): Redistribution effects of energy and climate policy<\/a>
\nHirth (2015): The optimal share of variable renewables<\/a>
\nHirth et al. (2015): Integration costs revisited<\/a>
\nHirth et al. (2016): Why wind is not coal<\/a>
\nHirth (2018): What caused the drop of European electricity prices?<\/a>
\nBlume-Werry et al. (2021): Eyes on the price: price-setting technologies<\/a>
\nHirth et al. (2024): Demand response to hourly wholesale prices<\/a>
\nStiewe et al. (2025): Cross-border cannibalization of wind & solar<\/a>
\nCanales et al. (2026): Empirical estimate of the electricity supply curve<\/a><\/p>\n

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[vc_row][vc_column width=”1\/1″][vc_column_text] Electricity Markets [\/vc_column_text][\/vc_column][\/vc_row] [vc_row][vc_column width=”2\/3″][vc_column_text] Capacity mechanisms, contracts for difference, the EU electricity market reform: the design of European power markets is being renegotiated [\u2026]<\/span><\/p>\n","protected":false},"author":3,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"inline_featured_image":false,"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"class_list":["post-6145","page","type-page","status-publish","hentry"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/neon.energy\/en\/wp-json\/wp\/v2\/pages\/6145","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/neon.energy\/en\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/neon.energy\/en\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/neon.energy\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/neon.energy\/en\/wp-json\/wp\/v2\/comments?post=6145"}],"version-history":[{"count":11,"href":"https:\/\/neon.energy\/en\/wp-json\/wp\/v2\/pages\/6145\/revisions"}],"predecessor-version":[{"id":6728,"href":"https:\/\/neon.energy\/en\/wp-json\/wp\/v2\/pages\/6145\/revisions\/6728"}],"wp:attachment":[{"href":"https:\/\/neon.energy\/en\/wp-json\/wp\/v2\/media?parent=6145"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}