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Value of flexible consumption in the electricity markets

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  • Biegel, Benjamin
  • Hansen, Lars Henrik
  • Stoustrup, Jakob
  • Andersen, Palle
  • Harbo, Silas

Abstract

A transition from an oil and coal based energy system to a systems based on renewable and sustainable energy sources has begun in many countries throughout the developed world. As a pioneer, Denmark currently has a wind energy penetration of 30% in the electricity sector and an end goal of 100% renewables in all energy sectors by 2050. The main elements in this transition are an increase in the wind energy production and electrification of main energy sectors such as transport and heating. Activation of flexible consumption in the electricity markets is believed to be one of the means to compensate for the growth of fluctuating renewables and the decrease of conventional power plants providing system-stabilizing services. In this work, we examine the requirements for flexible consumption to be active in the spot market and the regulating power market in the Nordic system and estimate the costs of entering these markets; further, we briefly describe the debated and planned changes in the electricity market to better accommodate flexible consumers. Based on recent market data, we estimate the revenue that flexible consumers can generate by market entry depending on the capacity of the consumers. The results show that consumers should have an energy capacity in the magnitude of 20−70 kWh to break-even in the spot market, while a capacity of 70−230 kWh is required in the regulating power market under current regulations. Upon implementation of the debated and planned market changes, the break-even capacity will decrease significantly, possibly to an energy capacity as low as 1 kWh.

Suggested Citation

  • Biegel, Benjamin & Hansen, Lars Henrik & Stoustrup, Jakob & Andersen, Palle & Harbo, Silas, 2014. "Value of flexible consumption in the electricity markets," Energy, Elsevier, vol. 66(C), pages 354-362.
  • Handle: RePEc:eee:energy:v:66:y:2014:i:c:p:354-362
    DOI: 10.1016/j.energy.2013.12.041
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    References listed on IDEAS

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    Cited by:

    1. Bernhard Faessler & Michael Schuler & Markus Preißinger & Peter Kepplinger, 2017. "Battery Storage Systems as Grid-Balancing Measure in Low-Voltage Distribution Grids with Distributed Generation," Energies, MDPI, Open Access Journal, vol. 10(12), pages 1-14, December.
    2. Katz, Jonas & Andersen, Frits Møller & Morthorst, Poul Erik, 2016. "Load-shift incentives for household demand response: Evaluation of hourly dynamic pricing and rebate schemes in a wind-based electricity system," Energy, Elsevier, vol. 115(P3), pages 1602-1616.
    3. Caumon, Pauline & Lopez-Botet Zulueta, Miguel & Louyrette, Jérémy & Albou, Sandrine & Bourasseau, Cyril & Mansilla, Christine, 2015. "Flexible hydrogen production implementation in the French power system: Expected impacts at the French and European levels," Energy, Elsevier, vol. 81(C), pages 556-562.
    4. Marta Guerra-Mota & Thereza Aquino & Isabel Soares, 2018. "European electricity utilities managing energy transition challenges," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 20(1), pages 213-230, December.
    5. Roos, Aleksandra & Bolkesjø, Torjus Folsland, 2018. "Value of demand flexibility on spot and reserve electricity markets in future power system with increased shares of variable renewable energy," Energy, Elsevier, vol. 144(C), pages 207-217.
    6. Jingpeng Yue & Zhijian Hu & Amjad Anvari-Moghaddam & Josep M. Guerrero, 2019. "A Multi-Market-Driven Approach to Energy Scheduling of Smart Microgrids in Distribution Networks," Sustainability, MDPI, Open Access Journal, vol. 11(2), pages 1-16, January.
    7. Gonçalves, Ivo & Gomes, Álvaro & Henggeler Antunes, Carlos, 2019. "Optimizing the management of smart home energy resources under different power cost scenarios," Applied Energy, Elsevier, vol. 242(C), pages 351-363.
    8. Roth, Lucas & Lowitzsch, Jens & Yildiz, Özgür & Hashani, Alban, 2016. "The impact of (co-) ownership of renewable energy production facilities on demand flexibility," MPRA Paper 73562, University Library of Munich, Germany.
    9. Fischer, David & Madani, Hatef, 2017. "On heat pumps in smart grids: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 70(C), pages 342-357.
    10. Broman Toft, Madeleine & Schuitema, Geertje & Thøgersen, John, 2014. "Responsible technology acceptance: Model development and application to consumer acceptance of Smart Grid technology," Applied Energy, Elsevier, vol. 134(C), pages 392-400.
    11. Ramin, D. & Spinelli, S. & Brusaferri, A., 2018. "Demand-side management via optimal production scheduling in power-intensive industries: The case of metal casting process," Applied Energy, Elsevier, vol. 225(C), pages 622-636.

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