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Industry’s possible contribution to stable power grids
Active participation in energy markets may pay off for large production sites

Flexibility is one of the key ingredients of the energy transition, as wind and solar power is known to depend on the time of day and weather conditions. But how can one reconcile volatile renewable feed-ins with demand? This becomes important whenever solar and wind farms generate more or less electricity than there is currently a need for. Hopes are placed in the continued development of energy stores. Experts from the Institute of Applied Computer Sciences GFaI, a member of the industrial research consortium Zuse, are exploring an alternative route in a project currently underway. They are looking into ways to integrate industry much more tightly in energy markets.

As a result, big power users would be in a position to tailor their demand to supply on the electricity market and be active traders on the exchange or the balancing power market. This could make demand for electricity more flexible and come more in line with the volatile output of renewable generation assets. And the potential this harbours is huge: Industry is one of the biggest power users, recently accounting for a good 25 percent of total energy consumption in the European Union while taking a whopping 28 percent of the German market.

Some ways of using these resources that render the energy system flexible have already been discovered. Industrial operations are already active on the market for balancing power. This electricity is used to compensate for sudden changes in grid load. To offset this, large businesses can ramp down their factories to reduce their electricity requirement whenever there are sudden drops in power produced by wind and solar farms. This is how manufacturing operations can lessen the load on grids. They are remunerated for this to ensure they are not put at a financial disadvantage. There are additional ways to smooth load and generation spikes. And this doesn’t always require companies to adjust production, as demonstrated by GFaI researchers.

Take existing freedoms to make consumption flexible

Energy streams such as steam and electricity needed for production are generated by in-house supply systems at many production sites. This potential can be leveraged to create the leeway indispensable to the energy transition: “Many industrial energy systems definitely allow one to be flexible. One example is the possibility to move various forms of energy around in line with supply on the market whenever electricity and heat are used,” says Stefan Kirschbaum, manager of the GFaI’s Flexibility Transition project, which is subsidised by the German Economics Ministry.

Above and beyond that, some industrial operations already have ways to use electricity flexibly, for instance by means of gas turbines, battery stores or block-type thermal power stations. Such assets can be used to reduce the need for electricity from the grid during periods of tight supply. GFaI expert Joram Wasserfall explains that investing in these technologies can absolutely prove worthwhile even for sites that have not employed such solutions thus far: “Plants will always try to purchase the lowest-cost electricity. And prices are low whenever supply is high. This is why it makes sense for companies to optimise their energy systems if only for purely economic reasons.”

Increased price flexibility through electricity exchange trading

The potential residing in an industrial location can be analysed by TOP Energy, software that is being developed by GFaI. It is also designed to determine when it makes sense to adjust the energy system. After all, optimising the management of in-house demand is but the first step. It can also prove worthwhile for companies to procure electricity directly on the exchange instead of via power purchase agreements. Accurate price trend forecasts are the prerequisite for this.

GFaI claims that its software is useful in these types of situation as well: “Our software enables us to analyse scenarios. Besides identifying potential, it analyses data including public bidding patterns and balancing power usage and makes predictions on this basis. This data can be used to help optimise operations,” Kirschbaum says. An issue that many businesses have been concerned with in light of the climate targets is that “we are seeing a rising trend to converting energy systems in order to reduce carbon dioxide emissions. One consideration in this context is whether it makes sense to play an active role on the energy market. Our software can answer this question,” declares Wasserfall.

Using the balancing power market as an additional source of income

Active participation in the energy market often entails more than just minimising the cost of meeting one’s own electricity requirement. Moreover, the balancing power market provides companies with options that go above and beyond stopping production at short notice. Whenever businesses have surplus generation capacity, they can feed power into the grid themselves during periods of significant demand. This can be a worthwhile income stream, and many locations meet the preconditions for this: in-house power production facilities and a flexible energy system.

According to the experts, however, most industrial players still shy away from taking an active role on the market: “It’s fairly rare for electricity to be put on the system. This is due in part to the high hurdles to market entry,” says Krischbaum. He cites a lack of in-house trading professionals as a frequent reason. This is why the researchers are also looking into market incentives that could make company participation more attractive. “Our goal is to use the findings from this project to create bespoke solutions,” Kirschbaum explains.

As revealed by the GFaI scientists, energy markets offer companies a host of prospects. TOP-Energy claims to be able to determine the best marketing option for any asset based on available data. The project will be subsidised until the autumn of 2022. The experts intend to further optimise the system until then: “We definitely want to look at other market mechanisms and refine our software,” Wasserfall announces. The object is to spur the energy transition by stabilising grids while opening the door to new revenue streams from the energy market for industrial operations.

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