The transition to clean and renewable energy sources (RES) poses challenges to electricity markets and the electricity transmission and distribution infrastructure. On the one hand, existing conventional power plants, powered by lignite, coal, and gas as well as nuclear power plants (in Germany) are replaced by (mostly) wind and solar power plants. On the other hand, mobility, heating, and many industrial processes will rely on electricity generated from RES for decarbonization in what has become known as sector coupling. This increases the total electricity demand and changes the temporal and spatial pattern of the demand, which puts further strain on the electricity grids and on the electricity markets that rely on the grid to function. An important challenge arising from these changes are congestions in the electricity grid. In order to secure stable grid operation, these congestions must be managed to avoid power flows that exceed the physical capacity of grid elements and would ultimately damage them.

This thesis explores various aspects of congestion management in European electricity markets. Four main research questions are covered in five articles. Multiple models are developed using techniques of linear programming to analyze questions with regard to the efficient operation of zonal electricity markets with congestion management (such as how to remove market distortions in local flexibility markets introduced by subsidized renewables), the welfare implications of the trade-off between increasing trading possibilities and accounting for grid constraints in Flow-Based Market Coupling (such as minRAM or introducing redispatch potential in the zonal market clearing algorithm), as well as sharing the costs associated with congestion management by using the Shapley value, a concept from cooperative game theory.

Among others, results show that (1) artificially increasing cross-border capacities beyond the physical realities in order to facilitate cross-border trade can reduce the efficiency of the overall market design, (2) adding nodal features to the zonal market clearing algorithm can decrease costs while increasing overall trade, (3) the Shapley value can be used to fairly allocate congestion costs using newly developed simplification methods, and (4) subsidies for renewables must be considered when designing redispatch markets, for example, by introducing side payments.