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Innovative Business Models for Market Uptake of Renewable Electricity unlocking the potential for flexibility in the Industrial Electricity Use

Periodic Reporting for period 2 - IndustRE (Innovative Business Models for Market Uptake of Renewable Electricity unlocking the potential for flexibility in the Industrial Electricity Use)

Reporting period: 2016-07-01 to 2017-12-31

Currently energy policy in Europe is in a transition and faces fundamental choices. Among others, the following two topics have been at the top of the agenda:
1) The cost-effective integration of variable renewable electricity into the power systems of Europe
2) The rising cost of electricity and its effects on the competitiveness of the European Industry
IndustRE has identified the flexibility potential of the industrial electricity demand as an opportunity that - through innovative business models - can facilitate further growth and integration of variable renewable energy, while reducing the industrial electricity costs.
In order to achieve this, the work has been structured around the following objectives:
• Describe in detail suitable business models for supplying variable renewable electricity to industrial users with flexibility in their demand, creating win-win situations
• Develop tools to facilitate adoption of the business models
• Formulate and promote policy recommendations for improvements in the current regulatory and market frameworks in the EU and the target countries
• Quantify the potential for further cost-effective grid integration of variable renewable electricity by the exploitation of the industrial electricity demand flexibility
• Engage more industries and variable renewable energy plant operators in direct action implementing the business models
The IndustRE project has delivered the following results in line with its objectives and milestones:
• A common starting point has been defined by outlining all possible business models for commercial exploitation of flexibility in the industrial electricity demand and variable renewable energy generation.
• The impact of the regulatory and market framework on the defined business models has been assessed for the target countries of the project.
• An extensive stakeholder consultation consisted of an online survey, two stakeholders workshop and bilateral in-depth phone discussions with selected stakeholders were carried out with the aim to identify the main barriers to the exploitation of the business models.
• The process described above has resulted in a detailed description of five business models.
• Model contracts have been drafted setting the foundations for developing bilateral contracts in those business models involving both industrial electricity users and variable energy producers.
• A methodology was developed that allows industries to assess how much flexibility they have and how they can benefit by using it though the five business models of the project.
• The methodology developed, was demonstrated in 7 case studies, covering 5 countries and all industrial sectors covered by the project.
• The benefits of industrial flexibility for the power system were quantified: Up to 2.5 bn Euro per year could be saved in an EU power system with 60% renewable energy if 20% of industrial electricity demand was flexible. On the other hand, the companies offering that flexibility could reduce their electricity bill by up to 10%.
• The project developed and promoted key policy recommendations to allow further easier implementation of the developed business models.
• More than 190,000 stakeholders including industries and renewable energy professionals have been reached through the projects dissemination activities during the project.
The business models, the policy recommendations and all project results can be seen in detail in the reports available in www.industre.eu
Increasing the share of renewable electricity will be among the main impacts of the IndustRE project. The direct outcome is the implementation of innovative business models where variable renewable energy can be operated economically with minimal impacts on the grid. As a result, additional capacities will be built, initially in the target countries and in association with the targeted industrial sectors and eventually all over Europe with the involvement of any industrial sector having some flexibility in their electricity demand.
In the case where the variable renewable energy plants are built in the land of the industrial units and more than two thirds of the generated electricity is self-consumed, a lot of the issues that affect the authorisation time for construction are not relevant anymore. The electrical connection requirements of the renewable energy plant could be made simpler if the peak power fed at any moment to the grid is reduced. Also if the power quality issues can be managed within the industrial “micro-grid” the electrical connection requirements are eliminated. In addition to that, no new transmission lines are required to connect the plant with the grid as there are high voltage connections available. It is expected that the environmental studies will be easier as data are available at the location of the industrial plants and the expected impacts are certainly lower in an already modified environment.
The reduced time in the authorisation process, results also in lower requirements from resources and thus lower transaction costs, both for the project developers as well as for the permitting authorities. Also the fact that the development takes place in an industrial site and no new transmission lines are required, reduces the risk that the public acceptance because of aesthetic or noise reasons will be an issue.
Even when the variable renewable energy is not on-site, but there is only a commercial agreement with a flexible industrial electricity user, there are benefits to be expected in relation to the authorisation times. Especially in weak grids where the maximum limits of variable electricity allowed by the system operator are reached, if it can be shown that there is an important industrial load committed to follow the production patterns of the variable renewable energy plant, it could facilitate the authorisation of the connection to the grid.
Improvements of the policy, regulatory and market support on the EU and national level in the target countries Belgium, France, Germany, Italy, Spain and UK will be also among the main impacts of the project. The direct outcome of the project has been concrete recommendations for improvements with increased chances for their at least partial adoption.
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Business models infographic