Quantifying the Potential Economic Benefits of Flexible Industrial Demand in the European Power System

Abstract

The envisaged decarbonization of the European power system introduces complex techno-economic challenges to its operation and development. Demand flexibility can significantly contribute in addressing these challenges and enable a cost-effective transition to the low-carbon future. Although extensive previous work has analyzed the impacts of residential and commercial demand flexibility, the respective potential of the industrial sector has not yet been thoroughly investigated despite its large size. This paper presents a novel, whole-system modeling framework to comprehensively quantify the potential economic benefits of flexible industrial demand (FID) for the European power system. This framework considers generation, transmission and distribution sectors of the system, and determines the least-cost long-term investment and short-term operation decisions. FID is represented through a generic, process-agnostic model, which however accounts for fixed energy requirements and load recovery effects associated with industrial processes. The numerical studies demonstrate multiple significant value streams of FID in Europe, including capital cost savings by avoiding investments in additional generation and transmission capacity and distribution reinforcements, as well as operating cost savings by enabling higher utilization of renewable generation sources and providing balancing services.

Optimization-based modelling and game-theoretic framework for techno-economic analysis of demand-side flexibility: a real case study

“…Industrial and commercial demand side response (I&C DSR) is highly dependant on specific business cases and requires detailed modelling of technological processes [33]. For example, in [34] Oikonomou and Parvania perform comprehensive modelling of a water desalination plant to determine potential capacity and marginal cost for providing DSR.…”

Investigating the effects of demand flexibility on electricity retailers’ business through a tri‐level optimisation model

“…In this setting, flexible demand technologies, enabling temporal redistribution (shifting) of electricity demand in time, have attracted great interest, since they exhibit the potential to support system balancing and reduce peak demand levels. Numerous studies have investigated these beneficial impacts of demand flexibility on electricity systems' short-term operation and long-term development [2][3][4][5][6].…”

Dynamic modelling of consumers’ inconvenience associated with demand flexibility potentials

“…Large consumers already have the possibility to make the flexibility in their demand available to the system operator [4], but incentives for smaller consumers to actively use the flexibility in their demand are currently not widespread. Nevertheless, surveys have shown that smaller consumers are willing to actively participate in demand-side management and have part of their load being shed or deferred if they are appropriately compensated [5].…”