Dynamic energy contracts, offering hourly varying day-ahead prices for electricity, create opportunities for a residential Battery Energy Storage System (BESS) to not just optimize the self-consumption of solar energy but also capitalize on price differences. This work examines the financial potential and impact on the self-consumption of a residential BESS that is controlled based on these dynamic energy prices for PV-equipped households in the Netherlands, where this novel type of contract is available. Currently, due to the Dutch Net Metering arrangement (NM) for PV panels, there is no financial incentive to increase self-consumption, but policy shifts are debated, affecting the potential profitability of a BESS. In the current situation, the recently proposed NM phase-out and the general case without NM are studied using linear programming to derive optimal control strategies for these scenarios. These are used to assess BESS profitability in the latter cases combined with 15 min smart meter data of 225 Dutch households to study variations in profitability between households. It follows that these variations are linked to annual electricity demand and feed-in pre-BESS-installation. A residential BESS that is controlled based on day-ahead prices is currently not generally profitable under any of these circumstances: Under NM, the maximum possible annual yield for a 5 kWh/3.68 kW BESS with day-ahead prices as in 2023 is EUR 190, while in the absence of NM, the annual yield per household ranges from EUR 93 to EUR 300. The proposed NM phase-out limits the BESS’s profitability compared to the removal of NM.
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This research presents a case study exploring the potential for demand side flexibility at a cluster of university buildings. The study investigates the potential of a collection of various electrical devices, excluding heating and cooling systems. With increasing penetration of renewable electricity sources and the phasing out of dispatchable fossil sources, matching grid generation with grid demand will become difficult using traditional grid management methods alone. Additionally, grid congestion is a pressing problem. Demand side management in buildings may contribute to a solution to these problems. Currently demand response is, however, not yet exploited at scale. In part, this is because it is unclear how this flexibility can be translated into successful business models, or whether this is possible under the current market regime. This research gives insight into the potential value of energy demand flexibility in reducing energy costs and increasing the match between electricity demand and purchased renewable electricity. An inventory is made of on-site electrical devices that offer load flexibility and the magnitude and duration of load shifting is estimated for each group of devices. A demand response simulation model is then developed that represents the complete collection of flexible devices. This model, addresses demand response as a ‘distribute candy’ problem and finds the optimal time-of-use for shiftable electricity demand whilst respecting the flexibility constraints of the electrical devices. The value of demand flexibility at the building cluster is then assessed using this simulation model, measured electricity consumption, and data regarding the availability of purchased renewables and day-ahead spot prices. This research concludes that coordinated demand response of large variety of devices at the building cluster level can improve energy matching by 0.6-1.5% and reduce spot market energy cost by 0.4-3.2%.
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The traditional energy industry is transitioning from a centralised fossil fuel based industry to a decentralised renewable energy industry for several reasons including climate change, policy, and changing customer needs. Furthermore, renewable sources, such as wind and solar, are intermittent and unpredictable. This has implications for the business models of energy producers, such as increased mismatch between demand and supply, increased price volatility, shift in drivers of value creation. Due to the low marginal cost of production and the intermittent nature of renewables, the price volatility on the electricity markets, in particular the imbalance market, are expected to increase. However, there is potential for market parties operating in the electricity sector to profit from this development by providing flexibility to balance electricity supply and demand. Therefore, new business models are needed that can harness and exploit flexibility in a viable manner. In these business models, flexibility becomes the key driver of value creation.
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