www.industre.eu
September 2016 Stakeholders Workshop
Simplified methodology to determine the value of industrial flexibility in given electricity market conditions.
1. This project has received fundingfrom the EuropeanUnion’s Horizon2020 research and Innovation programme
under grant agreement No 646191 - The sole responsibilityfor the content of this presentation lies with the
authors. It does not necessarilyreflect the opinion of the European Union. Neither INEA nor the European
Commission are responsiblefor any use that may be made of the information containedtherein
September 12, 2016
Jef Verbeeck - VITO/EnergyVille
Methodology for optimal valorization of industrial flexible electricity consumption
stakeholder meeting:
“Demand side flexibility
business case estimation
made easy … ”
2. www.IndustRE.eu
Contents
Slide 2
Part I How calculating a demand response business case?
Part II The need for a simplified methodology
Part III The simplified methodology step-by-step
Part IV On-site renewable energy business case
Part V Conclusions and further steps
3. www.IndustRE.eu
Contents
Slide 3
Part I How calculating a demand response business case?
Part II The need for a simplified methodology
Part III The simplified methodology step-by-step
Part IV On-site renewable energy business case
Part V Conclusions and further steps
4. www.IndustRE.eu
How can you make money with flexibility?
Part I: What do you need to calculate a demand response business case?
Slide 4
flexibility
model
business
models
regulation
market data
Business model
Commodity
Network charges
Commodity
Network charges
FC reserve
FR reserve
R reserve
Imbalance optimization
On-site VRE optimization
Standard contract optimization
Day-ahead optimization
Reserve capacity
BE FR DE IT ES UK
5. www.IndustRE.eu
What is possible from a legal point of view?
Part I: What do you need to calculate a demand response business case?
Slide 5
“Although EU guidelines are quite clear,
implementation pace is different…”
flexibility
model
business
models
regulation
market data
Business model
Commodity
Network charges
Commodity
Network charges
FC reserve
FR reserve
R reserve
BE FR DE IT ES UK
Standard contract optimization
Day-ahead optimization
Reserve capacity
Imbalance optimization
On-site VRE optimization
business case is viable in exisiting regulatory framework
business case limited viability/restricted in current regulatory framework
business case impossible in existing regulatory framework
6. www.IndustRE.eu
Which price data is available?
Part I: What do you need to calculate a demand response business case?
Slide 6
flexibility
model
business
models
regulation
market data
Business model
Commodity
Network charges
Commodity
Network charges
FC reserve
FR reserve
R reserve
BE FR DE IT ES UK
Standard contract optimization
Day-ahead optimization
Reserve capacity
Imbalance optimization
On-site VRE optimization
public price data available
bilateral price data estimates available
(bilateral) price data not available
7. www.IndustRE.eu
How much flexibility is available?
Part I: What do you need to calculate a demand response business case?
Slide 7
flexibility
model
business
models
regulation
market data
+
flexgraph
total
flexgraph 1
flexgraph 2
flexgraph 3
flexibility
modelling
flexibility
modelling
flexibility
modelling
+total
energy
consumption
inflexible
consumption
8. www.IndustRE.eu
Calculate the business case
Part I: What do you need to calculate a demand response business case?
Slide 8
flexibility
model
business
models
regulation
market data
business
case
business case
calculation
Business model
Commodity PP PP PP PP PP PP
Network charges PP PP PP PP PP PP
Commodity PP PP PP PP PP PP
Network charges PP PP PP PP PP PP
FC reserve C C C - - C
FR reserve - C/PP C/PP - - C
R reserve C C C/PP - - C
DIP DIP PP DIP/PP DIP DIP
DS DS DS DS - DS
Standard contract optimization
Day-ahead optimization
Reserve capacity
Imbalance optimization
On-site VRE optimization
BE FR DE IT ES UK
PP
DS
DIP
C
Price profile optimization method (energy + peak)
Dual supplier optimization method (supplier + own production + peak )
Dual imbalance price optimization
Total costs optimization method (capacity only)
9. www.IndustRE.eu
Contents
Slide 9
Part I How calculating a demand response business case?
Part II The need for a simplified methodology
Part III The simplified methodology step-by-step
Part IV On-site renewable energy business case
Part V Conclusions and further steps
10. www.IndustRE.eu
Skills for creating a flexibility model …
Part II: The need for a simplified methodology
Slide 10
flexibility
model
A flexibility model is the result of a 2 stage process:
selection stage:
• identification of flexibility during a site survey or audit
• requires good top-level understanding of industrial
processes with focus on energy flows
modelling stage:
• construction of a mathematical model which describes
production process and constraints from energy
consumption point of view
• requires understanding of modelling and optimization
techniques
The combination of skills is not so obvious
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Accuarcy of the business case value
Part II: The need for a simplified methodology
Slide 14
“Building up interest in demand response
is for many companies a long, time
consuming, multi-stage process…”
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Accuarcy of the business case value
Part II: The need for a simplified methodology
Slide 15
“Building up interest in demand response
is for many companies a long, time
consuming, multi-stage process…”
… but an order of magnitude business case
estimation is enough to plant a seed”
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Requirements of a simplified methodology
Part II: The need for a simplified methodology
Slide 16
1 Being cost effective and time efficient
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Requirements of a simplified methodology
Part II: The need for a simplified methodology
Slide 17
1
2
Being cost effective and time efficient
Order of magnitude accuracy estimation is
good enough
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Requirements of a simplified methodology
Part II: The need for a simplified methodology
Slide 18
1
2
3
Being cost effective and time efficient
Order of magnitude accuracy estimation is
good enough
No specific modelling and optimization
knowledge and tools needed
19. www.IndustRE.eu
Contents
Slide 19
Part I How calculating a demand response business case?
Part II The need for a simplified methodology
Part III The simplified methodology step-by-step
Part IV On-site renewable energy business case
Part V Conclusions and further steps
20. www.IndustRE.eu
The naïve approach …
Part III: The simplified methodology step-by-step
Slide 20
“Database with many
precalculated business cases”
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A smarter approach … in 4 steps
Part III: The simplified methodology step-by-step
Slide 21
1
2
3
map
normalize
select
4 scale
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A smarter approach … in 4 steps
Part III: The simplified methodology step-by-step
Slide 22
1
2
3
map
normalize
select
4 scale
24. www.IndustRE.eu
Example: generic battery model
Part III: The simplified methodology step-by-step
Slide 24
ro
ri
bmax
bmin
b
P
Emax
EPin Pout
Emin
generic
battery model
buffered
industrial process
25. www.IndustRE.eu
Example: generic battery model
Part III: The simplified methodology step-by-step
Slide 25
ro
ri
bmax
bmin
b
P
Emax
EPin Pout
Emin
generic
battery model
buffered
industrial process
CHP with a hot
water storage tank
26. www.IndustRE.eu
A smarter approach … in 4 steps
Part III: The simplified methodology step-by-step
Slide 26
1
2
3
map
normalize
select
4 scale
27. www.IndustRE.eu
Some properties scale very well …
Part III: The simplified methodology step-by-step
Slide 27
1x
“If you can earn 20€/year by trading
electricity on the day-ahead
market with 1 car battery … “
Pin = 2 kW
Pout = 2 kW
Emax = 1 kWh
28. www.IndustRE.eu
Some properties scale very well …
Part III: The simplified methodology step-by-step
Slide 28
1x 20x
“If you can earn 20€/year by trading
electricity on the day-ahead
market with 1 car battery … “
Pin = 2 kW
Pout = 2 kW
Emax = 1 kWh
“… you can earn 400€/year
with 20 car batteries!“
Pin = 40 kW
Pout = 40 kW
Emax = 20 kWh
29. www.IndustRE.eu
Some properties scale very well …
Part III: The simplified methodology step-by-step
Slide 29
“If you can earn 2.000€/year by
shifting electricity consumption
from day to night … “
89€/MWh
104€/MWh
15€/MWh
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Some properties scale very well …
Part III: The simplified methodology step-by-step
Slide 30
“If you can earn 2.000€/year by
shifting electricity consumption
from day to night … “
“… you can earn 4.000€/year
in case the price difference
doubles …“
89€/MWh
104€/MWh
15€/MWh
30€/MWh
79€/MWh
109€/MWh
31. www.IndustRE.eu
A smarter approach … in 4 steps
Part III: The simplified methodology step-by-step
Slide 31
1
2
3
map
normalize
select
4 scale
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Making money with a “reference battery” on the day ahead market
Part III: The simplified methodology step-by-step
Slide 32
“Day ahead electricity price for 1 day …”
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Making money with a “reference battery” on the day ahead market
Part III: The simplified methodology step-by-step
Slide 33
“Buy electricity when cheap …”
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Making money with a “reference battery” on the day ahead market
Part III: The simplified methodology step-by-step
Slide 34
“Well electricity when expensive …”
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Making money with a “reference battery” on the day ahead market
Part III: The simplified methodology step-by-step
Slide 35
“Keep within the battery upper and lower limit”
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Making money with a “reference battery” on the day ahead market
Part III: The simplified methodology step-by-step
Slide 36
“Start and stop with a 50% charged battery”
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Making money with a “reference battery” on the day ahead market
Part III: The simplified methodology step-by-step
Slide 37
• For 1 day in this example: profit = 66,16€
• For whole year: profit = 19.240€/year
• … or an average profit of 2,2€/MW/h
• In case you double the battery size, but not
the Pin and Pout, unfortunately this doesn’t
scale very well
“But why not putting it in a graph?”
39. www.IndustRE.eu
A smarter approach … in 4 steps
Part III: The simplified methodology step-by-step
Slide 39
1
2
3
map
normalize
select
4 scale
40. www.IndustRE.eu
Scale back to the real process parameters
Part III: The simplified methodology step-by-step
Slide 40
1x 20x
“If you can earn 20€/year by trading
electricity on the day-ahead
market with 1 car battery … “
Pin = 2 kW
Pout = 2 kW
Emax = 1 kWh
“… you can earn 400€/year
with 20 car batteries!“
Pin = 40 kW
Pout = 40 kW
Emax = 20 kWh
42. www.IndustRE.eu
Summary
Part III: The simplified methodology step-by-step
Slide 42
industrial
process
normalized
reference
process
“ … which will be mapped on a reference
process …”
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Summary
Part III: The simplified methodology step-by-step
Slide 43
industrial
process
normalized
reference
process
“ … which is normalized to an 1MW
equivalent …”
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Summary
Part III: The simplified methodology step-by-step
Slide 44
normalized
business
case graph
normalized
business
case graph
normalized
business
case graph
industrial
process
normalized
reference
process
normalized
business
case
normalized
business
case graph
normalized
business
case graph
referenceprocesses
business cases
normalized
business
case graph
“ … select the correct normalized
business case graph and value … ”
45. www.IndustRE.eu
Summary
Part III: The simplified methodology step-by-step
Slide 45
normalized
business
case graph
normalized
business
case graph
normalized
business
case graph
industrial
process
normalized
reference
process
normalized
business
case
normalized
business
case graph
normalized
business
case graph
referenceprocesses
business cases
normalized
business
case graph
“ … and scale back to the correct
business case value.”
business
case
46. www.IndustRE.eu
Contents
Slide 46
Part I How calculating a demand response business case?
Part II The need for a simplified methodology
Part III The simplified methodology step-by-step
Part IV On-site renewable energy business case
Part V Conclusions and further steps
48. www.IndustRE.eu
At low wind conditions
Part IV: On-site renewable energy business case
Slide 48
grid to customer 100€/MWh
wind to customer 40€/MWh
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At high wind conditions
Part IV: On-site renewable energy business case
Slide 49
wind to customer 40€/MWh
wind to grid
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On-site VRE with the generic battery model
Part IV: On-site renewable energy business case
Slide 50
Emax
E
Emin
generic battery model
inflexible
load+
+
57. www.IndustRE.eu
On-site VRE normalized business case graph RE
Part IV: On-site renewable energy business case
Slide 57
“ … and if you plot it differently,
you even see that there are optimal ratio’s …”
58. www.IndustRE.eu
Contents
Slide 58
Part I How calculating a demand response business case?
Part II The need for a simplified methodology
Part III The simplified methodology step-by-step
Part IV On-site renewable energy business case
Part V Conclusions and further steps
59. www.IndustRE.eu
Have the requirements been met?
Part V: Conclusions and further steps
Slide 59
1
2
3
Being cost effective and time efficient
Order of magnitude accuracy estimation is
good enough
No specific modelling and optimization
knowledge and tools needed
60. www.IndustRE.eu
Have the requirements been met?
Part V: Conclusions and further steps
Slide 60
1
2
3
Being cost effective and time efficient
Order of magnitude accuracy estimation is
good enough
No specific modelling and optimization
knowledge and tools needed
“ Under the condition that the industrial
process can be mapped on a relevant
reference process, the approach is very
straightforward “
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Does this really work for complex cases?
Part V: Conclusions and further steps
Slide 61
BC value ≤ BC4 value + BC6 value
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Next steps with the methodology
Part V: Conclusions and further steps
Slide 62
• Methodology will be tested and refined (if
needed) during a number of case studies
• Case studies will take place Q4-2016 till Q2-
2017 in the 6 target countries
63. www.IndustRE.eu
• Bringing this methodology to the market is
part of the IndustRE project
• A successful webinar was organised as a first
information session, showing the potential of
the methodology
• Mid 2017, a hands-on workshop will be
organized we’ll keep you informed!
Next steps with the methodology
Part V: Conclusions and further steps
Slide 63
64. www.IndustRE.eu
Contact information
Part V: Conclusions and further steps
Jef Verbeeck
Senior Researcher Energy Technology
+32 14 33 59 17
jef.verbeeck@energyville.be
Steven Van Deun
Business Development EnergyVille
+32 14 33 58 37
steven.vandeun@energyville.be
Thor Park 8310 | 3600 Genk | Belgium
Daan Six
Project Manager Energy Technology
+32 14 33 58 47
daan.six@energyville.be
Slide 64