Transmission and Generation Investment in Electricity Markets: The Effects of Market Splitting and Network Fee Regimes

In this paper we propose a three–level computational equilibrium model that allows to analyze the impact of the regulatory environment on transmission line expansion (by the regulator) and investment in generation capacity (by private firms) in liberalized electricity markets. The basic model analyzes investment decisions of the transmission operator (TO) and private firms in expectation of an energy only market and cost-based redispatch. In different specifications we consider the cases of one versus two price zones (market splitting) and analyze different approaches to recover network cost, in particular lump sum, capacity based, and energy based fees. In order to compare the outcomes of our multi–stage market model with the first best benchmark, we also solve the corresponding integrated planer problem. In two simple test networks we illustrate that energy only markets can lead to suboptimal locational decisions for generation capacity and thus, imply excessive network expansion. Market splitting heals those problems only partially. Those results obtain for both, capacity and energy based network tariffs, although investment slightly differs across those regimes

Not All Doom and Gloom: How Energy-Intensive and Temporally Flexible Data Center Applications May Actually Promote Renewable Energy Sources

To achieve a sustainable energy system, a further increase in electricity generation from renewable energy sources (RES) is imperative. However, the development and implementation of RES entail various challenges, e.g., dealing with grid stability issues due to RES’ intermittency. Correspondingly, increasingly volatile and even negative electricity prices question the economic viability of RES-plants. To address these challenges, this paper analyzes how the integration of an RES-plant and a computationally intensive, energy-consuming data center (DC) can promote investments in RES-plants. An optimization model is developed that calculates the net present value (NPV) of an integrated energy system (IES) comprising an RES-plant and a DC, where the DC may directly consume electricity from the RES-plant. To gain applicable knowledge, this paper evaluates the developed model by means of two use-cases with real-world data, namely AWS computing instances for training Machine Learning algorithms and Bitcoin mining as relevant DC applications. The results illustrate that for both cases the NPV of the IES compared to a stand-alone RES-plant increases, which may lead to a promotion of RES-plants. The evaluation also finds that the IES may be able to provide significant energy flexibility that can be used to stabilize the electricity grid. Finally, the IES may also help to reduce the carbon-footprint of new energy-intensive DC applications by directly consuming electricity from RES-plants

STAY FLEXIBLE: A PRESCRIPTIVE PROCESS MONITORING APPROACH FOR ENERGY FLEXIBILITY-ORIENTED PROCESS SCHEDULES

The transition of energy supply from fossil fuels to renewable energy sources poses major challenges for balancing increasingly weather-dependent energy supply and demand. Demand-side energy flexibility, offered particularly by companies, is seen as a promising and necessary approach to address these challenges. Process mining provides significant potential to prevent a deterioration of product quality or process flows due to flexibilization and allows for exploiting monetary benefits associated with flexible process operation. Hence, we follow the design science research paradigm to develop PM4Flex, a prescriptive process monitoring approach, that generates recommendations for pending process flows optimized under fluctuating power prices by implementing established energy flexibility measures. Thereby, we consider company- and process-specific constraints and historic event logs. We demonstrate and evaluate PM4Flex by implementing it as a software prototype and applying it to exemplary data from a heating and air conditioning company, observing considerable cost-savings of 1.42ct per kWh or 7.89%

The Power of Consumers: On the Interplay Between Consumer-Centric Markets and Energy Justice

editorial reviewedAs electricity systems undergo a profound transformation characterized by decentralization and the emergence of millions of new electricity consumers, including electric vehicles and heat pumps, the complexity of modern electricity markets is on the rise. This development presents a unique opportunity for consumers to actively participate in electricity markets. To avoid divergent developments, it is essential to comprehensively consider the interplay between electricity market design and energy justice. This chapter identifies main barriers to consumer centric electricity markets and outlines a modern cycle of energy justice and consumer centric electricity markets. Consumer-centric electricity markets, which put consumers at the heart, can be a catalyst for energy justice. Conversely, energy justice and its various forms can help design and successfully implement consumer-centric electricity markets aligned with a low-carbon economy and society. Policymakers must address both policy areas cohesively to avoid the emergence of electricity markets that fail to harness justice potentials. Consumer-centric electricity markets have the potential to drive transformative change, making it imperative to empower consumers in this evolving landscape. Now is the time to give power to consumers.9. Industry, innovation and infrastructur

Artificial Intelligence in Energy Demand Response: A Taxonomy of Input Data Requirements

The ongoing energy transition increases the share of renewable energy sources. To combat inherent intermittency of RES, increasing system flexibility forms a major opportunity. One way to provide flexibility is demand response (DR). Research already reflects several approaches of artificial intelligence (AI) for DR. However, these approaches often lack considerations concerning their applicability, i.e., necessary input data. To help putting these algorithms into practice, the objective of this paper is to analyze, how input data requirements of AI approaches in the field of DR can be systematized from a practice-oriented information systems perspective. Therefore, we develop a taxonomy consisting of eight dimensions encompassing 30 characteristics. Our taxonomy contributes to research by illustrating how future AI approaches in the field of DR should represent their input data requirements. For practitioners, our developed taxonomy adds value as a structuring tool, e.g., to verify applicability with respect to input data requirements

Industrial demand-side flexibility:A key element of a just energy transition and industrial development

In many countries, industry is one of the largest consumers of electricity. Given the special importance of electricity for industry, a reliable electricity supply is a basic prerequisite for further industrial development and associated economic growth. As countries worldwide transition to a low-carbon economy (in particular, by the development of renewable energy sources), the increasing fluctuation in renewable energy production requires new flexibility options within the electricity system in order to guarantee security of supply. It is advanced in this paper that such a flexibility transition with an active participation of industry in general has unique potential: It will not only promote green industrial development, but also become an engine for inclusive industrial development and growth as well as delivering a just transition to a low-carbon economy. Given the high potential of industrial demand-side flexibility, a first monitoring approach for such a flexibility transition is illustrated, which bases on a flexibility index. Our flexibility index allows for an indication of mis-developments and supports an appropriate implementation of countermeasures together with relevant stakeholders. Hence, it holds various insights for both policy-makers and practice with respect to how industrial demand-side flexibility can ensure advances towards an inclusive, just, and sustainable industrial development

The role of flexibility in the light of the COVID-19 pandemic and beyond:Contributing to a sustainable and resilient energy future in Europe

The energy sector provides fuel for much of everyday life, particularly economically and socially. Fighting against the COVID-19 pandemic, a well-functioning and resilient energy sector is vital for maintaining the operation of critical infrastructures, including, most importantly, the health sector, and timely economic recovery. Notwithstanding its importance in everyday life and crises, the energy sector itself is currently in a complex and far-reaching transformation to combat climate change whilst supporting the transition to a low-carbon economy and society, mainly through the development of variable renewable energy sources (RES) such as wind and solar photovoltaics. This paper highlights the need for energy resilience as countries face the triple challenge of the COVID-19 health crisis, the consequent economic crisis, and the climate crisis. Focusing on Europe, it is advanced here that with the ability to balance fluctuating electricity generation and demand, flexibility allows the energy sector to utilise low-carbon RES reliably, ensuring a more resilient and sustainable energy future. This paper derives five urgent policy recommendations for Europe that address possible impacts of COVID-19 on the economic and societal prerequisites for flexibility in energy systems

Obstacles to demand response: why industrial companies do not adapt their power consumption to volatile power generation

Various flexibility options in power systems, such as storage, grid expansion, and demand flexibility, gain increasing importance to balance the intermittent power supply of renewables. On the demand side, especially the industrial sector represents promising potential for Demand Response, i.e., the alignment of its power demand with the current power supply of renewables. However, there exist various obstacles that currently prevent companies from investing in new or (fully) exploiting existing flexibility potentials. In this paper, we investigate how economic, regulatory, technological, organizational, behavioral, informational, and competence obstacles pose barriers for companies to adjust their power consumption flexibly. For this purpose, we combine both a structured literature analysis and a case study. For the case study, we conduct 16 interviews with energy experts from companies from different industries. Our findings reveal that due to technical risk of disrupting the production process, lacking revenues, and too low cost savings, companies do not flexibilize their power consumption. Moreover, in particular, contradictory legislative incentives and missing IT standardization and interoperability represent key obstacles. Therefore, our results constitute a basis for targeted policy making in order to foster the exploitation of (existing) flexibility potential of industrial companies on the demand side