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The Value of IS-Enabled Flexibility in Electricity Demand : A Real Options Approach

Title data

Fridgen, Gilbert ; Häfner, Lukas ; König, Christian ; Sachs, Thomas:
The Value of IS-Enabled Flexibility in Electricity Demand : A Real Options Approach.
2015
Event: 12th International Conference on Wirtschaftsinformatik (WI) , 04.03.-06.03.2015 , Osnabrück, Germany.
(Conference item: Conference , Paper )

Official URL: Volltext

Abstract in another language

As the transition to renewable energy sources progresses, their integration makes electricity production increasingly fluctuating, also causing amplified volatility in electricity prices on energy markets. To contribute to power grid stability, utilities need to balance volatile supply through shifting demand. This measure of demand side management creates flexibility, being enabled as the integration of IS in the power grid grows. The flexibility of deferring consumption to times of lower demand or higher supply bears an economic value. We show how to quantify this value in order to support decisions on short-term consumer compensation. We adapt real options theory, which has been widely used in IS research for valua-tion under uncertainty. Addressing a prerequisite, we develop a stochastic pro-cess, which realistically replicates intraday electricity spot price development. We employ it in a binomial tree model to assess the value of IS-enabled flexibility in electricity demand.

Further data

Item Type: Conference item (Paper)
Refereed: Yes
Additional notes: Nominierung für den Best Paper Award
Keywords: demand side management, load shifting, electricity spot pricemodel, real options
Institutions of the University: Faculties > Faculty of Law, Business and Economics > Department of Business Administration
Faculties > Faculty of Law, Business and Economics > Department of Business Administration > Professorship Business Informations Systems and sustainable IT management
Faculties > Faculty of Law, Business and Economics > Department of Business Administration > Professorship Business Informations Systems and sustainable IT management > Professorship Business Informations Systems and sustainable IT management- Univ.-Prof. Dr. Gilbert Fridgen
Research Institutions
Research Institutions > Affiliated Institutes
Research Institutions > Affiliated Institutes > Fraunhofer Project Group Business and Information Systems Engineering
Research Institutions > Affiliated Institutes > FIM Research Center Finance & Information Management
Faculties
Faculties > Faculty of Law, Business and Economics
Result of work at the UBT: Yes
DDC Subjects: 000 Computer Science, information, general works > 004 Computer science
300 Social sciences > 330 Economics
Date Deposited: 31 Mar 2015 08:53
Last Modified: 12 Mar 2019 15:58
URI: https://eref.uni-bayreuth.de/id/eprint/7774