Flexibilitätswende – integration of industrial energy systems into regional electricity markets to stabilize the electricity grid

 

Background

In order to achieve the goals of the German "Energiewende", the German Government forces the expansion of renewable energies. As a result, power supply is increasingly fluctuating. Since electricity from renewable energies is fed into the grid with priority, the cost-effectiveness of large-scale power plants decreases, and in some cases these power plants are shut down by the operators. However, large power plants contribute to the stability and security of supply in today's electricity grid. In addition, the partially strong spatial separation of renewable power generation and power consumption, for example, in the case of wind power, leads to further challenges for the transmission grid.

To still enable grid stability in Germany, redispatch volumes are increasing. Therefore, efficient market mechanisms are needed to preserve grid stability. However, the current energy market design is questionable. The current structure of central energy markets needs to be questioned whether centralized markets are an obstacle to the successful implementation of the German "Energiewende". Thus, the project "Flexibilitätswende" examined regional electricity markets and their influence on the provision of flexibility by market participants.

 

Objective

Copyright: © Institute of Technical Thermodynamics Market mechanisms were developed in "Flexibilitätswende" to investigate market incentives for flexibility provision by industrial energy systems.

The aim of the project "Flexibilitätswende" was to develop methods for optimizing and evaluating flexibility from the perspective of industrial market participants and from market perspective. Industrial energy systems were examined as promising market participants for the provision of flexibility. Thus, flexibilities in the industrial sector could be used efficiently to ensure the stability of the power grid and, at the same time, ensure a future-proof market design. To achieve the project goal, new mathematical optimization models were developed and analyzed, and new algorithms for solving the optimization problems were developed, implemented, and evaluated using case studies. Here, the flexibilization of various industrial energy systems participating in different electricity markets served as a case study.

 

Results

In the project "Flexibilitätswende", the LTT developed several methods for modeling, optimizing, and evaluating the flexibility of industrial energy systems participating in electricity and balancing-power market markets.

In "Flexibilitätswende", a method was developed to optimize the marketing of flexibility in the day-ahead market, intraday market, and balancing-power market. Here, the integration of continuous trading on the intraday market into an integrated optimization on sequential power markets was particularly innovative. Option-price theory was used to estimate revenues from continuous trading on the intraday market, while stochastic optimization determined an optimized bidding strategy and allocated the flexible capacity. The case study of a flexible industrial energy system showed that coordinated bidding in all three markets led to significant cost reductions compared to participating in only one or two markets.

In addition, a method was developed in "Flexibilitätswende" to optimize industrial energy systems together with batch production systems for participation in the balancing-power market. Thus, further flexibility potentials could be exploited to stabilize the power grid by shifting the production and thus, energy demands of the production system in time. The method was based on stochastic optimization and identified a fixed production schedule that gave the industrial energy system the optimal flexibility to participate in the balancing-power market.

Finally, flexibility options for industrial energy systems were determined, considering uncertain future scenarios. The analysis examined electricity- and hydrogen-based investment options that contributed to the decarbonization of the energy system. These options thus allowed for direct or indirect electrification of the industrial energy system, enabling flexibility in various ways. Using superstructure-based optimization, highly efficient heat pumps were identified as a cost-effective option for a wide range of electricity and hydrogen prices.

Overall, the methods and results of the project "Flexibilitätswende" could help optimize the operation and planning of future industrial energy systems to exploit flexibility potentials.

 

Relevant Publications

• Nolzen, N., Reinert, C., Frohmann, J., Tillmanns, D., Bardow, A. (2023). Design of low-carbon multi-energy systems in the SecMOD framework by combining MILP optimization and life-cycle assessment. Comp. Chem. Eng., 108176. https://doi.org/10.1016/j.compchemeng.2023.108176
• Nolzen, N., Ganter, A., Baumgärtner, N., Leenders, L., Bardow, A. (2022). Where to Market Flexibility? Optimal Participation of Industrial Energy Systems in Balancing-Power, Day-Ahead, and Continuous Intraday Electricity Markets. arXiv preprint arXiv:2212.12507. https://arxiv.org/abs/2212.12507
• Leenders, L., Starosta, A., Baumgärtner, N., Bardow, A. (2020). Integrated scheduling of batch production and utility systems for provision of control reserve, in: ECOS 2022 – 33^rd International Conference on Efficiency, Cost, Optimization, Simulation and Environmental Impact of Energy Systems, Osaka, 2020, pp. 712–723. https://doi.org/10.3929/ethz-b-000423722.

 

Sponsor

Copyright: © BMWi

This project was funded by the German Federal Ministry of Economics and Energy.