The document discusses business models for activating industrial demand response through the IndustRE project. It outlines 5 business models: (1) reducing electricity bills by responding to time-varying prices, (2) providing system services to balance supply and demand, (3) long-term electricity supply contracts with off-site renewable energy, (4) balancing service contracts with off-site renewable energy, and (5) reducing bills with on-site renewable energy through self-consumption. It analyzes each model and the regulatory barriers in different European countries. The presentation aims to formulate policy recommendations to realize flexibility potential from industrial demand.

1. www.IndustRE.eu
This project has received fundingfrom the EuropeanUnion’s Horizon2020 research and Innovation programmeunder
grant agreementNo 646191 - The sole responsibilityfor the content of this presentation lies with the authors. It does
not necessarily reflect the opinionof the European Union.Neither INEA nor the EuropeanCommission are responsible for
any use that may be made of the informationcontained therein
Business models for activating
industrial demand response
INDUSTRE Project
Webinar
12 September 2017

2. www.IndustRE.eu
The challenge
the IndustRE project sees the industrial electricity demand
flexibility as an opportunity to deal with both challenges at
the same time
The cost-effective integration
of variable renewable
electricity into the European
power systems
The rising cost of electricity
and its effects on the
competitiveness of the
European Industry

3. www.IndustRE.eu
Objectives
The project brings together the large industry with the
renewable energy community in order find common
ground and create win-win situations.
• Formulate business models
• Develop tools to facilitate their adoption
• Quantify the potential benefits for the power system
• Formulate policy recommendations

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Project Focus & Geographical Coverage

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Business Models
Flexible
demand only
+ contract with
offsite VRE
+ contract with
onsite VRE
Energy costs
Network and
other regulated
costs
System services
SavingsRevenues
Available tools
Flexible Industrial
Demand (FID)
Variable Renewable
energy (VRE)
Business Model
Strategy
N
Strategy
2
Strategy
1

6. www.IndustRE.eu
Business Models
Flexible
demand only
+ contract with
offsite VRE
+ contract with
onsite VRE
Supplier price
response
Market price
response
ToU network
tariff
Energy costs
Network and
other regulated
costs
System services
SavingsRevenues
Available tools
i
Model I
Electricity Bill reduction:
• React to time-varying prices
from a supplier or market
• Reduce peak demand in
accordance to network
tariff structure

7. www.IndustRE.eu
Business Models
Flexible
demand only
+ contract with
offsite VRE
+ contract with
onsite VRE
Supplier price
response
Market price
response
ToU network
tariff
Balancing
provision and
other services
Energy costs
Network and
other regulated
costs
System services
SavingsRevenues
Available tools
i
ii
Model II
System Service Provider:
• Provide frequency control
services and balancing
• Capacity remuneration,
load interrumpibility, or
distribution network
services

8. www.IndustRE.eu
Business Models
Flexible
demand only
+ contract with
offsite VRE
+ contract with
onsite VRE
Supplier price
response
Market price
response
ToU network
tariff
Balancing
provision and
other services
Long-term
electricity
supply
Energy costs
Network and
other regulated
costs
System services
SavingsRevenues
Available tools
i
ii
iii
Model III
Electricity Supply Contract
with off-site VRE:
Establish long-term energy
contract with VRE

9. www.IndustRE.eu
Business Models
Flexible
demand only
+ contract with
offsite VRE
+ contract with
onsite VRE
Supplier price
response
Market price
response
ToU network
tariff
Balancing
provision and
other services
Long-term
electricity
supply
Bilateral
balancing
provision
Energy costs
Network and
other regulated
costs
System services
SavingsRevenues
Available tools
i
ii
iii
iv
Model IV
Balancing Service Contract
with off-site VRE:
Stablish flexibility contract to
support VRE balance

10. www.IndustRE.eu
Business Models
Flexible
demand only
+ contract with
offsite VRE
+ contract with
onsite VRE
Supplier price
response
Market price
response
ToU network
tariff
Balancing
provision and
other services
Long-term
electricity
supply
Bilateral
balancing
provision
Long-term
electricity
supply
Volumetric
tariff response
Energy costs
Network and
other regulated
costs
System services
SavingsRevenues
Available tools
i
ii
iii
iv
v
Model V
Electricity Bill Reduction
with on-site VRE:
• Through self consumption
• Reduce net-demand

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Q & A
• Do you think that there is a need to activate industrial demand to
provide flexibility in the power system in the next decade?
• Yes, mainly due to limited interconnections
• Yes, mainly because of high expected penetration of VRE
• No, there is enough flexibility in the current conventional generation
• No, because new technologies, such as storage, will provide enough flexibility
• No, because there is not enough potential from the industrial demand
• Which of the presented business models do you think has the
highest potential?
• energy bill management,
• provision of system services,
• long term contracts with off-site renewable generation,
• bilateral balancing with renewable generation,
• installation of on-site renewable generation.
• Which do you think is the key enabler for demand response in the
industry?
• Opening markets to demand participation
• Adequate technical requirements for demand participation
• Allow aggregation of demand
• Economic attractiveness of the procured service

12. www.IndustRE.eu
Regulatory barriers
Flexible
demand only
+ contract with
offsite VRE
+ contract with
onsite VRE
Supplier price
response
Market price
response
ToU network
tariff
Energy costs
Network and
other regulated
costs
System services
SavingsRevenues
Available tools
i
Model I
Electricity Bill reduction
Feasible and implemented in
all target countries
FID have direct access to the
market or retailers offer time-
varying energy prices
Cost-reflective network tariffs
FID is focussed on this model.
Business model BE FR DE IT ES UK
model I
model II
model III
model IV
model V

13. www.IndustRE.eu
Regulatory barriers
Flexible
demand only
+ contract with
offsite VRE
+ contract with
onsite VRE
Supplier price
response
Market price
response
ToU network
tariff
Balancing
provision and
other services
Energy costs
Network and
other regulated
costs
System services
SavingsRevenues
Available tools
i
ii
Model II
System Service Provider
Growing EU trend to modify the design
of balancing markets to allow the
participation of demand-side
resources but some barriers remain.
Capacity remuneration mechanisms
gradually introduced allowing demand
participation (e.g. UK, next FR & IT).
Load interruptibility programs present
in all target countries (significant
source of income for industrial
consumers).
Business model BE FR DE IT ES UK
model I
model II
model III
model IV
model V

14. www.IndustRE.eu
Regulatory barriers
Flexible
demand only
+ contract with
offsite VRE
+ contract with
onsite VRE
Supplier price
response
Market price
response
ToU network
tariff
Balancing
provision and
other services
Long-term
electricity
supply
Energy costs
Network and
other regulated
costs
System services
SavingsRevenues
Available tools
i
ii
iii
Model III
Electricity Supply Contract
with off-site VRE
Feasible but still only
hypothetical nowadays in the
European context because of
VRE support schemes
EU strategy foresees
progressive VRE market
integration for mature
technologies.
Business model BE FR DE IT ES UK
model I
model II
model III
model IV
model V

15. www.IndustRE.eu
Regulatory barriers
Flexible
demand only
+ contract with
offsite VRE
+ contract with
onsite VRE
Supplier price
response
Market price
response
ToU network
tariff
Balancing
provision and
other services
Long-term
electricity
supply
Bilateral
balancing
provision
Energy costs
Network and
other regulated
costs
System services
SavingsRevenues
Available tools
i
ii
iii
iv
Model IV
Balancing Service Contract
with off-site VRE
Even though VRE generators are
balance responsible, not
generally possible or attractive
because of the design of
imbalance settlement
arrangements
In BE, DE, and UK single
imbalance pricing
IT & SP dual imbalance pricing
but no aggregation G & D
Business model BE FR DE IT ES UK
model I
model II
model III
model IV
model V

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Regulatory barriers
Flexible
demand only
+ contract with
offsite VRE
+ contract with
onsite VRE
Supplier price
response
Market price
response
ToU network
tariff
Balancing
provision and
other services
Long-term
electricity
supply
Bilateral
balancing
provision
Long-term
electricity
supply
Volumetric
tariff response
Energy costs
Network and
other regulated
costs
System services
SavingsRevenues
Available tools
i
ii
iii
iv
v
Model V
Electricity Bill Reduction with
on-site VRE
Could be an attractive decision
for the FID in some countries (FR,
IT, DE) although exemptions from
paying certain regulated charges
on self-consumed energy are
being gradually eliminated or cut
down (e.g. ES).
Self-generation is incentivized in
BE & UK tariffs applied to net-
consumption.
Business model BE FR DE IT ES UK
model I
model II
model III
model IV
model V

17. www.IndustRE.eu
Next
 Existing regulatory barriers
Business model BE FR DE IT ES UK
model I
model II
model III
model IV
model V
business case is viable in existing regulatory framework
business case limited viability/restricted in current regulatory framework
business case impossible in existing regulatory framework
Next webinar we will present policy recommendations
to overcome these barriers

18. www.IndustRE.eu
Q & A
• Do you think there is an added value in the synergy between
industrial demand and on-site renewable generation?
• Yes, always
• Yes, but just in case demand can adapt to the renewable generation
profile
• No, current developments are just marketing
• No, because net metering policies or volumetric tariffs provide no real
benefits to the system
• Which do you think is the main barrier for full deployment of
industrial demand response in the previously presented business
cases in your country?
• technical requirements,
• demand cannot participate,
• aggregation is not allowed,
• tariffs do not incentivize demand response,
• there is no need for flexibility,
• demand response is too expensive,
• subsidies for renewable energy distort the market,

19. www.IndustRE.eu
Tomás Gómez San Román
Pablo Frías Marín
Lorenzo Simons
Instituto de Investigación Tecnológica (IIT)
www.iit.comillas.edu