Incentivizing demand-side management, chances and risks for medium-sized industries

Demand-side management (DSM) is a vital source of flexibility necessary for the increasing integration of variable renewable energy. And time varying electricity tariffs are widely proposed as an incentive for end users to utilize their potential. While existing literature focuses on residential users or energy cost intensive industries, this work investigates a medium-sized industry, a gravel plant. The plant has DSM potentials from its production processes as well as the potential to install Photovoltaics (PV). The system is modelled with an integrated optimization model for flexible processes and energy system and analyzed in three key aspects - total costs, emissions, and operation complexity. Results show that with time varying electricity tariffs, the plant is directly exposed to high prices, which leads to a cost increase. The utilization of DSM, e.g. electricity price conscious production planning, reduces costs by 4.2 % and, coincidentally, emissions by 4.0 %, as carbon pricing weakly couples both objectives. It also increases the operation complexity as the plant constantly reacts to price fluctuations. The addition of PV significantly improves the system in all aspects; however, without further support, it may not be a viable investment for firms with limited capital. Lastly, it is recommended that the design of novel electricity tariffs should be tailored to user groups on the basis of their energy-related potential, their operational characteristics, and the acceptable level of risk exposure.