IDEAS home Printed from https://ideas.repec.org/p/diw/diwwpp/dp1840.html
   My bibliography  Save this paper

The Role of Aggregators in Facilitating Industrial Demand Response: Evidence from Germany

Author

Listed:
  • Jan Stede
  • Karin Arnold
  • Christa Dufter
  • Georg Holtz
  • Serafin von Roon
  • Jörn C. Richstein

Abstract

Industrial demand response can play an important part in balancing the intermittent production from a growing share of renewable energies in electricity markets. This paper analyses the role of aggregators – intermediaries between participants and the electricity market – in facilitating industrial demand response. Based on the results from semi-structured interviews with German demand response aggregators, as well as a wider stakeholder online survey, we examine the role of aggregators in overcoming barriers to industrial demand response. We find that a central role for aggregators is to raise awareness for the potentials of demand response, as well as to support implementation by engaging key actors in industrial companies. Moreover, we develop a taxonomy that helps analyse how the different functional roles of aggregators create economic value. We find that there is considerable heterogeneity in the kind of services that aggregators offer, many of which do create significant economic value. However, some of the functional roles that aggregators currently fill may become obsolete once market barriers to demand response are reduced or knowledge on demand response becomes more diffused.

Suggested Citation

  • Jan Stede & Karin Arnold & Christa Dufter & Georg Holtz & Serafin von Roon & Jörn C. Richstein, 2020. "The Role of Aggregators in Facilitating Industrial Demand Response: Evidence from Germany," Discussion Papers of DIW Berlin 1840, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp1840
    as

    Download full text from publisher

    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.702192.de/dp1840.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Koliou, Elta & Eid, Cherrelle & Chaves-Ávila, José Pablo & Hakvoort, Rudi A., 2014. "Demand response in liberalized electricity markets: Analysis of aggregated load participation in the German balancing mechanism," Energy, Elsevier, vol. 71(C), pages 245-254.
    2. Burger, Scott & Chaves-Ávila, Jose Pablo & Batlle, Carlos & Pérez-Arriaga, Ignacio J., 2017. "A review of the value of aggregators in electricity systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 77(C), pages 395-405.
    3. Ländner, Eva-Maria & Märtz, Alexandra & Schöpf, Michael & Weibelzahl, Martin, 2019. "From energy legislation to investment determination: Shaping future electricity markets with different flexibility options," Energy Policy, Elsevier, vol. 129(C), pages 1100-1110.
    4. Littlechild, S.C., 2000. "Why We Need Electricity Retailers: A Reply to Joskow on Wholesale Spot Price pass-through," Cambridge Working Papers in Economics 0008, Faculty of Economics, University of Cambridge.
    5. Gils, Hans Christian, 2014. "Assessment of the theoretical demand response potential in Europe," Energy, Elsevier, vol. 67(C), pages 1-18.
    6. Cappers, Peter & MacDonald, Jason & Goldman, Charles & Ma, Ookie, 2013. "An assessment of market and policy barriers for demand response providing ancillary services in U.S. electricity markets," Energy Policy, Elsevier, vol. 62(C), pages 1031-1039.
    7. Torriti, Jacopo & Hassan, Mohamed G. & Leach, Matthew, 2010. "Demand response experience in Europe: Policies, programmes and implementation," Energy, Elsevier, vol. 35(4), pages 1575-1583.
    8. Strbac, Goran, 2008. "Demand side management: Benefits and challenges," Energy Policy, Elsevier, vol. 36(12), pages 4419-4426, December.
    9. Ignacio J. Pérez-Arriaga, Jesse D. Jenkins, and Carlos Batlle, 2017. "A regulatory framework for an evolving electricity sector: Highlights of the MIT utility of the future study," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    10. Good, Nicholas & Ellis, Keith A. & Mancarella, Pierluigi, 2017. "Review and classification of barriers and enablers of demand response in the smart grid," Renewable and Sustainable Energy Reviews, Elsevier, vol. 72(C), pages 57-72.
    11. Paulus, Moritz & Borggrefe, Frieder, 2011. "The potential of demand-side management in energy-intensive industries for electricity markets in Germany," Applied Energy, Elsevier, vol. 88(2), pages 432-441, February.
    12. Söder, Lennart & Lund, Peter D. & Koduvere, Hardi & Bolkesjø, Torjus Folsland & Rossebø, Geir Høyvik & Rosenlund-Soysal, Emilie & Skytte, Klaus & Katz, Jonas & Blumberga, Dagnija, 2018. "A review of demand side flexibility potential in Northern Europe," Renewable and Sustainable Energy Reviews, Elsevier, vol. 91(C), pages 654-664.
    13. Eid, Cherrelle & Koliou, Elta & Valles, Mercedes & Reneses, Javier & Hakvoort, Rudi, 2016. "Time-based pricing and electricity demand response: Existing barriers and next steps," Utilities Policy, Elsevier, vol. 40(C), pages 15-25.
    14. Kim, Jin-Ho & Shcherbakova, Anastasia, 2011. "Common failures of demand response," Energy, Elsevier, vol. 36(2), pages 873-880.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Schwidtal, Jan Marc & Agostini, Marco & Coppo, Massimiliano & Bignucolo, Fabio & Lorenzoni, Arturo, 2023. "Optimized operation of distributed energy resources: The opportunities of value stacking for Power-to-Gas aggregated with PV," Applied Energy, Elsevier, vol. 334(C).
    2. Fioriti, Davide & Frangioni, Antonio & Poli, Davide, 2021. "Optimal sizing of energy communities with fair revenue sharing and exit clauses: Value, role and business model of aggregators and users," Applied Energy, Elsevier, vol. 299(C).
    3. Adrian Tantau & András Puskás-Tompos & Laurentiu Fratila & Costel Stanciu, 2021. "Acceptance of Demand Response and Aggregators as a Solution to Optimize the Relation between Energy Producers and Consumers in order to Increase the Amount of Renewable Energy in the Grid," Energies, MDPI, vol. 14(12), pages 1-19, June.
    4. Chen, Ting & Vandendriessche, Frederik, 2023. "Enabling independent flexibility service providers to participate in electricity markets: A legal analysis of the Belgium case," Utilities Policy, Elsevier, vol. 81(C).
    5. Mohseni, Soheil & Brent, Alan C. & Kelly, Scott & Browne, Will N., 2022. "Demand response-integrated investment and operational planning of renewable and sustainable energy systems considering forecast uncertainties: A systematic review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 158(C).
    6. Sæle, Hanne & Sperstad, Iver Bakken & Wang Hoiem, Kristian & Mathiesen, Vivi, 2023. "Understanding barriers to utilising flexibility in operation and planning of the electricity distribution system – Classification frameworks with applications to Norway," Energy Policy, Elsevier, vol. 180(C).
    7. Ricardo Faia & Tiago Pinto & Zita Vale & Juan Manuel Corchado, 2021. "Prosumer Community Portfolio Optimization via Aggregator: The Case of the Iberian Electricity Market and Portuguese Retail Market," Energies, MDPI, vol. 14(13), pages 1-20, June.
    8. Adrian Tantau & András Puskás-Tompos & Costel Stanciu & Laurentiu Fratila & Catalin Curmei, 2021. "Key Factors Which Contribute to the Participation of Consumers in Demand Response Programs and Enable the Proliferation of Renewable Energy Sources," Energies, MDPI, vol. 14(24), pages 1-22, December.
    9. Lin, Jin & Dong, Jun & Dou, Xihao & Liu, Yao & Yang, Peiwen & Ma, Tongtao, 2022. "Psychological insights for incentive-based demand response incorporating battery energy storage systems: A two-loop Stackelberg game approach," Energy, Elsevier, vol. 239(PC).
    10. Golmohamadi, Hessam, 2022. "Demand-side management in industrial sector: A review of heavy industries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 156(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Stede, Jan & Arnold, Karin & Dufter, Christa & Holtz, Georg & von Roon, Serafin & Richstein, Jörn C., 2020. "The role of aggregators in facilitating industrial demand response: Evidence from Germany," Energy Policy, Elsevier, vol. 147(C).
    2. Leinauer, Christina & Schott, Paul & Fridgen, Gilbert & Keller, Robert & Ollig, Philipp & Weibelzahl, Martin, 2022. "Obstacles to demand response: Why industrial companies do not adapt their power consumption to volatile power generation," Energy Policy, Elsevier, vol. 165(C).
    3. Alcázar-Ortega, Manuel & Calpe, Carmen & Theisen, Thomas & Carbonell-Carretero, José Francisco, 2015. "Methodology for the identification, evaluation and prioritization of market handicaps which prevent the implementation of Demand Response: Application to European electricity markets," Energy Policy, Elsevier, vol. 86(C), pages 529-543.
    4. Richstein, Jörn C. & Hosseinioun, Seyed Saeed, 2020. "Industrial demand response: How network tariffs and regulation (do not) impact flexibility provision in electricity markets and reserves," Applied Energy, Elsevier, vol. 278(C).
    5. Dranka, Géremi Gilson & Ferreira, Paula, 2019. "Review and assessment of the different categories of demand response potentials," Energy, Elsevier, vol. 179(C), pages 280-294.
    6. Ayman Esmat & Julio Usaola & Mª Ángeles Moreno, 2018. "A Decentralized Local Flexibility Market Considering the Uncertainty of Demand," Energies, MDPI, vol. 11(8), pages 1-32, August.
    7. Zhou, Kaile & Yang, Shanlin, 2015. "Demand side management in China: The context of China’s power industry reform," Renewable and Sustainable Energy Reviews, Elsevier, vol. 47(C), pages 954-965.
    8. Ribó-Pérez, D. & Carrión, A. & Rodríguez García, J. & Álvarez Bel, C., 2021. "Ex-post evaluation of Interruptible Load programs with a system optimisation perspective," Applied Energy, Elsevier, vol. 303(C).
    9. Ussama Assad & Muhammad Arshad Shehzad Hassan & Umar Farooq & Asif Kabir & Muhammad Zeeshan Khan & S. Sabahat H. Bukhari & Zain ul Abidin Jaffri & Judit Oláh & József Popp, 2022. "Smart Grid, Demand Response and Optimization: A Critical Review of Computational Methods," Energies, MDPI, vol. 15(6), pages 1-36, March.
    10. Paterakis, Nikolaos G. & Erdinç, Ozan & Catalão, João P.S., 2017. "An overview of Demand Response: Key-elements and international experience," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 871-891.
    11. Olsthoorn, Mark & Schleich, Joachim & Klobasa, Marian, 2015. "Barriers to electricity load shift in companies: A survey-based exploration of the end-user perspective," Energy Policy, Elsevier, vol. 76(C), pages 32-42.
    12. Alasseri, Rajeev & Tripathi, Ashish & Joji Rao, T. & Sreekanth, K.J., 2017. "A review on implementation strategies for demand side management (DSM) in Kuwait through incentive-based demand response programs," Renewable and Sustainable Energy Reviews, Elsevier, vol. 77(C), pages 617-635.
    13. Good, Nicholas & Ellis, Keith A. & Mancarella, Pierluigi, 2017. "Review and classification of barriers and enablers of demand response in the smart grid," Renewable and Sustainable Energy Reviews, Elsevier, vol. 72(C), pages 57-72.
    14. Devenish, Anna, 2023. "Institutional and contextual drivers of and barriers to incentive-based demand response: A comparative case study in the Pacific Northwest," Utilities Policy, Elsevier, vol. 84(C).
    15. Alcázar-Ortega, Manuel & Calpe, Carmen & Theisen, Thomas & Rodríguez-García, Javier, 2015. "Certification prerequisites for activities related to the trading of demand response resources," Energy, Elsevier, vol. 93(P1), pages 705-715.
    16. Morales-España, Germán & Martínez-Gordón, Rafael & Sijm, Jos, 2022. "Classifying and modelling demand response in power systems," Energy, Elsevier, vol. 242(C).
    17. Richstein, Jörn C. & Hosseinioun, Seyed Saeed, 2020. "Industrial demand response: How network tariffs and regulation (do not) impact flexibility provision in electricity markets and reserves," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 278.
    18. Gils, Hans Christian, 2014. "Assessment of the theoretical demand response potential in Europe," Energy, Elsevier, vol. 67(C), pages 1-18.
    19. Jörn C. Richstein & Seyed Saeed Hosseinioun, 2020. "Industrial Demand Response: How Network Tariffs and Regulation Do (Not) Impact Flexibility Provision in Electricity Markets and Reserves," Discussion Papers of DIW Berlin 1853, DIW Berlin, German Institute for Economic Research.
    20. McPherson, Madeleine & Stoll, Brady, 2020. "Demand response for variable renewable energy integration: A proposed approach and its impacts," Energy, Elsevier, vol. 197(C).

    More about this item

    Keywords

    Aggregator; demand response; barriers; function; roles; industry; interview;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:diw:diwwpp:dp1840. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bibliothek (email available below). General contact details of provider: https://edirc.repec.org/data/diwbede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.