Economic potential for future demand response in Germany – Modeling approach and case study

Abstract

The activation of demand response (DR) potentials offered by electricity consumer flexibility is one promising option for providing balancing power and energy in supply systems with high share of variable renewable energy (VRE) power generation. In this paper, a model-based assessment of the economic DR potential in Germany is presented. It relies on the extension of the REMix energy system model by flexible electric loads. In a case study considering a future German power supply system with a VRE share of 70%, possible cost reductions achieved by investment in DR are quantified. The sensitivity of the results to changes in the assumed DR costs and characteristics are analysed in additional simulations. The results show that the major benefit of employing DR is its ability to substitute peak power generation capacity, whereas the impact on the integration of VRE power generation is lower. This implies that the focus of DR is on the provision of power, not energy. Even at rather pessimistic cost DR assumptions, more than 5 GW of power plant capacity can be substituted. Consumer flexibility furthermore triggers an increase in the operation of backup power plants, whereas it decreases the utilization of pumped storage hydro stations. In the model results, the reductions in annual power supply costs achieved by DR add up to several hundreds of millions of Euros.

100% Renewable Energy Supply for Brazil—The Role of Sector Coupling and Regional Development

“…This work makes use of a simplified model representation of demand response (DR), compared to that used in previous publications of REMix results [37,38]. Here, load shifting is modelled as fictitious energy storage for preponing and postponing demand.…”

“…A detailed description of REMix appears in [32]. In contrast to previous studies [37,38], we use a simplified model representation of DR, which is described in Appendix A and documented in Equations (A1)-(A9) and Table A1. For countries with abundance of dispatchable renewable potentials, such as Brazil, the contribution of DR to load balancing is rather limited.…”

The Social Costs of Electricity Generation—Categorising Different Types of Costs and Evaluating Their Respective Relevance

“…It should be noted that, particularly at high penetration rates of VRE technologies, profile costs differ considerably depending on how flexible the overall system is or is assumed to be in the future. Various studies show that the profile costs of VRE technologies can be reduced significantly through, among other things, consumer demand response (including temporal flexibility in charging electric vehicles), grid and storage capacity extensions, combining wind and solar PV with the use of dispatchable renewable energy technologies and also through system-friendly design, location or orientation/tilt of wind and solar PV plants [52,[70][71][72]. Findings in studies indicating extremely high marginal profile costs for certain VRE shares (such as in [51] for solar PV shares exceeding about 15% and wind shares exceeding about 25%) should therefore be interpreted with care if they do not assume that electricity demand will be able to adjust or that low-cost supply-side flexibility options can be achieved.…”

Assessing energy business cases implemented in the North Sea Region and strategy recommendations

“…For example, [7] assessed the potential for cost reductions by considering a future German power system with a variable renewable energy share of 70% of the total energy supplied scenario. [8] investigated the potential for DSM to match the energy demand for a domestic dishwasher with available renewable energy supply to reduce cost and greenhouse gas emissions from thermal generation.…”