The potential of price-driven flexible electricity demand and its effect on the electricity price in the Netherlands

The potential of price-driven flexible electricity demand and its effect on the electricity price in the Netherlands

Jorna, Nienke (TU Delft Technology, Policy and Management)

Warnier, Martijn (mentor)
Lukszo, Z. (mentor)
Poorte, M. (mentor)

Delft University of Technology

Complex Systems Engineering and Management (CoSEM)

2020-10-08

Renewable energy sources like wind and solar, are intermittent, which means demand will not always match supply causing volatile and sometimes even negative electricity prices. For power companies it will be valuable to invest in technologies that can respond to those prices, which will result in an increasing flexibility of demand. However, to which electricity price and in what capacity these flexible technologies respond, and thus price elasticity occurs, is uncertain. The uncertainty regarding the future development of flexibility complicates the prediction of future electricity prices and therefore, the current investment decisions of power companies. Furthermore, when more investments are made in flexible demand-side energy technologies, it can be expected that the effective moments with negative or low prices will be low, because the price elasticity of electricity demand increases due to the extra installed flexible capacity. This would then negatively affect the business cases of these technologies. So, more detailed insight on the potential price-driven flexible demand in the Netherlands and the effect of this flexibility on the electricity prices is needed so that accurate investment decisions can be made. Electricity price modelling and scenario analysis was done in order to assess the effect of demand response, storage and flexible demand-side technologies, such as power-to-heat or power-to-gas, on the electricity price. The results show that flexible demand increases the electricity price during low-priced hours and decreases the electricity price during peak hours, having a flattening effect on the price duration curves. Moreover, the scenario shows that given the electricity prices there is at least room for 6000 MW upward flexible demand and 1700 MW downward flexible demand in an energy system with 50% VRE, and 11000 MW upward flexible demand and 5200 MW downward flexible demand in an energy system with 70% VRE. Nonetheless, a small case study on the potential of a power-to-heat technology points out the most progressive flexible demand scenarios might not be realistic because there are other limitations to the potential of flexible demand than the availability of electricity prices to which the technologies can respond. Lastly, it was concluded price-driven flexible demand improves the integration of VRE into the energy system.

Flexible electricity demand
Electricity Prices
Demand Response
Storage
Price elasticity
Power-to-heat

http://resolver.tudelft.nl/uuid:3b781cc5-a92e-4e07-a143-04d02f9afe39

Student theses

master thesis

© 2020 Nienke Jorna