How Flexible Are Energy Flexibilities? : Developing a Flexibility Score for Revenue and Risk Analysis in Industrial Demand-Side Management

Title data

Rusche, Simon ; Weissflog, Jan ; Wenninger, Simon ; Häckel, Björn:
How Flexible Are Energy Flexibilities? : Developing a Flexibility Score for Revenue and Risk Analysis in Industrial Demand-Side Management.
In: Applied Energy. (September 2023) . - 121351.
ISSN 1872-9118
DOI: https://doi.org/10.1016/j.apenergy.2023.121351

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Abstract in another language

With rising and increasingly volatile energy prices demand-side management (DSM) becomes attractive in industry to optimize flexible electricity demand and remain competitive. Despite economic and ecologic benefits for companies, DSM implementation is not yet widespread. High effort in flexibility audits and complex optimization models to quantify economic potential of DSM represent initial barriers in practice. This raises the question of whether there is a simple way to analyze economic DSM potential as an initial indicator of successful DSM implementation that requires little data on flexibility characteristics. To address this need, this study develops a flexibility score that describes the degrees of freedom of individual flexibility measures, i.e., how flexible a flexibility measure is. The flexibility score is tested and validated in a risk-return analysis on 46 real-world industrial flexibility measures from Germany optimized with integer linear programming (ILP). Analyzing the German Day-Ahead and Intraday market, the results show an increase in expected revenues and a simultaneous decrease in revenue risk with an increasing flexibility score – thus outlining DSM investments as attractive. Our study proposes an empirically validated artifact to evaluate the economic potential of flexibility measures with little effort and derives implications for practice, research, and policy.