Assessing the value of flexibility options for least-cost decarbonization pathways in sector-coupled energy systems

Steffi Misconel, M.Sc.
https://tu-dresden.de/bu/wirtschaft/bwl/ee2/die-professur/beschaeftigte/steffi-schreiber https://orcid.org/my-orcid?orcid=0000-0003-2005-4316

1. What is the title of your dissertation? How did the idea come about to deal with this particular topic in your doctoral thesis?

© Ben Gierig

The title of my dissertation is "Assessing the value of flexibility options for least-cost decarbonization pathways in sector-coupled energy systems". To achieve widespread decarbonization, the energy system of the future will be characterized by very high shares of renewables and a high degree of electrification of demand-side sectors. Since generation from weather-dependent renewables and electricity demand often diverge in time, flexibility options are needed that enable the integration of renewables and balance the temporal imbalance of electricity supply and demand.

My thesis is about determining decarbonization pathways for the German and European sector-coupled energy system and analyzing the interplay of different flexibility options (e.g. energy storage, load management applications, power-to-heat, power-to-gas, electromobility, etc.) and their contribution to decarbonization and renewable energy integration.

The idea for the PhD project came up while I was writing my master thesis. In 2017, I had written my thesis at the regional energy supplier ENSO AG (today SachsenEnergie AG) in the field of business development on the topic "Development of a methodology to determine the value of flexibility options in electricity systems".

During the four-month processing time, I realized how dynamic and multifaceted the topic is and how many questions still need to be clarified. In my doctoral thesis, I wanted to consciously take the time to conduct research in the field with the help of robust methods of energy system analysis.

2. What are the central research questions of your dissertation and what methods do you use to answer these questions?

I am writing a cumulative dissertation consisting of 6-8 papers. Six papers are set, the last two are in the editing process and fit well into the storyline. If the two papers are completed before the dissertation is submitted, I will include them. Due to the large number of papers, the research questions are diverse and include among others:

• Which flexibility options facilitate the integration of intermittent renewable energy sources into electricity systems? What is the role of flexibility options in different electricity systems with a focus on Europe and selected countries?
• How does the increasing electrification of the demand side affect the generation adequacy in the electricity sector? Does the potential flexibility provision of battery electric vehicles and heat pumps in combination with heat storage systems help to avoid critical electricity supply situations?
• What is the optimal energy portfolio in a decarbonized power sector with increasing demand-side electrification? What are the trade-offs and interrelations between the different flexibility options?
• What is the potential role of demand response and its impact on the optimal combinations of flexibility options within the decarbonization pathways for the European energy system with 100% renewables and sector coupling?
• What is the marginal CO2 abatement cost curve of the optimal combination of renewables and flexibility options for the decarbonization pathway of the German sector-coupled energy system? What is the impact of vehicle-to-grid on the CO2 abatement potential and costs of renewables and flexibility options?
• What is the impact of different flexibility options on the capacity needs for hydrogen power plants to achieve 100% renewable power generation?

The questions were mostly answered with a fundamental linear optimization model, which was developed in a basic version (ELTRAMOD) at the Chair of Energy Economics of the TUD and which I further developed and adapted for my specific use cases during my PhD. The model is formulated using the software system GAMS (General Algebraic Modeling System).

3. What do you think are the most exciting results of your research?

This is truly a difficult question with no clear answer. The bottom line is that each of the papers leads to interesting and insightful findings. The results of the various papers highlight crucial cross-sector interactions of different flexibility options and their influence on optimal investment and dispatch decisions from an electricity market perspective.

For example, one analysis shows that the least-cost capacity mix is significantly influenced by the use of various demand-side management (DSM) measures. In addition to interactions with DSM applications, storage systems are particularly affected by electrification across sectors. Since an increase in electricity demand due to demand-side electrification reduces the occurrence of low or negative residual load, the incentives for electricity market-based storage technologies are also reduced. Also of great importance for the optimal flexibility mix in the power system is the use of power-to-X technologies. In addition to flexibility options (e.g., PtX, DSM, battery storage), back-up capacity is still needed to ensure system flexibility. High fuel and CO2 prices can provide critical incentives that increase the competitiveness of low-carbon/neutral technologies (e.g., hydrogen power plants, electrolyzers, battery storage, etc.). Nevertheless, only an ambitious expansion of renewables can significantly reduce additional fossil fuel power generation while increasing the value of storage technologies and creating a mix of flexibility options in a sector-coupled energy system. In summary, the mix of installed flexibility options in the power sector is highly dependent on electricity demand and RES feed-in, as well as electrification of demand-side sectors.
https://doi.org/10.1007/978-3-030-60914-6_10

In another paper, we show that European demand response potential (load control) can reduce the need for alternative flexibility provision. Activating demand response to shift electricity demand over time affects the optimal investment in power plants and, in particular, reduces the need for peak load power plants. The results indicate that daily photovoltaic feed-in characteristics have a higher correlation with the temporal pattern of load shifting and load shedding of demand response applications than wind feed-in characteristics. Finally, demand response leads to smoothing of residual load and better integration of renewables, especially wind and solar PV. These interactions ultimately reduce CO2 emissions and overall system costs of the European power system.

Greater demand-side participation in flexibility provision through demand response offers great flexibility potential, but requires appropriate market designs and cooperation between grid operators and local utilities. In general, demand-side flexibility has technical and economic advantages over alternative flexibility options and has multiple implications for the optimal mix of available technologies. Therefore, it is important to ensure that energy policies and market frameworks do not act as barriers, but rather incentivize investments and cost-effective demand-side management measures.
https://doi.org/10.1016/j.apenergy.2021.117326

In a further research article, we determine marginal CO2 abatement cost curves (MACC) and identify measures to achieve the decarbonization goals of the German sector-coupled energy system, also showing the interactions of different decarbonization measures. For example, the results show that Vehicle-to-Grid (VtG - controlled discharge of battery electric vehicles) significantly reduces the CO2 abatement costs of rooftop PV systems. In contrast, VtG cannibalizes other balancing options such as batteries and power-to-gas-to-power. In addition, VtG leads to less fluctuation and lower residual load, as well as lower short-term electricity generation costs compared to an identical technology portfolio without VtG. The analysis highlights the critical role of VtG and its significant flexibility potential, which is still underutilized due to the lack of appropriate support mechanisms and financial subsidies. To further reduce transportation-related CO2 emissions, policymakers should promote all-electric vehicles and provide price incentives for vehicle owners to increase demand response adoption and enable flexible use of batteries for the power system.

The analysis also identifies power-to-heat systems as an important decarbonization measure. In the heating and building sector, for example, old heating systems should be replaced by heat pump systems, which usually requires investments in modern radiators and in the building envelope.

In addition, the results underscore the enormous investment required for renewable energies, which must be taken into account in order to achieve the climate targets for Germany by 2030. The analysis shows that it is more cost-effective to invest in RES, even if RES surpluses and RES curtailment occur in the early and middle phases of a decarbonization pathway.

Investing in storage systems early in the decarbonization pathway is not cost-effective because such systems are more capital intensive than installing ground-mounted PV and onshore wind. Balancing and storage solutions become cost-effective once a significant amount of RES surpluses (~50 TWh/year) can be used.

In a later decarbonization phase, green hydrogen plays an important role for power generation in industry and the power sector as a substitute for conventional fuels. Rather than relying solely on high CO2 prices, electrolyzers should be supported through technology support (e.g., R&D, green funds for investors, tax and investment credits, infrastructure development) and demand-side measures (e.g., tax credits for green hydrogen consumption or government procurement) to create the technology’s competitiveness now for the later needed emission reductions.
https://doi.org/10.1016/j.jclepro.2022.133173

4. Only recently you succeeded in publishing a paper in the Journal of Cleaner Production, which was the result of an international collaboration with the Institute for Renewable Energy at the EURAC Research Center (Bolzano, Italy). How did this international collaboration come about? Did you go to Italy to do research?

In July 2021, I started a research exchange at the EURAC Research Center at the Institute for Renewable Energies in Bolzano. The collaboration came about through a former project partner from the Netherlands from Utrecht University, whom I met in the EU Horizon project REFLEX. The colleague told me that he would start his post-doc at the EURAC research center. This piqued my interest, because the EURAC Institute for Renewable Energy had established a new research group for energy system modeling and electromobility at the beginning of 2021, which was a great fit for my expertise acquired at the TUD Chair of Energy Economics. After I asked whether a research exchange between EURAC and TUD was possible, everything happened very quickly. Together with EURAC colleagues Matteo Prina and Wolfram Sparber, as well as Hannes Hobbie and Prof. Dominik Möst from the TUD Chair of Energy Economics, we wrote two publications during my research exchange on the topic of determining model-based marginal CO2 abatement cost curves to identify efficient and cost-effective decarbonization pathways for sector-coupled energy systems.

Links to the publications:
https://doi.org/10.1016/j.jclepro.2022.133173

http://hdl.handle.net/10419/260472

I was also drawn to Italy for personal reasons. My husband is Italian and comes from the Trentino region (Cavalese / Val di Fiemme). The region of South Tyrol and Trentino is beautiful and invites you to spend time in nature at any time of the year, be it hiking or skiing in the Dolomites. From this point of view, the opportunity for research exchange was an absolute stroke of luck for me. In addition, the TUD Graduate Academy supported my stay with a travel grant for short research stays, for which I am very grateful.

I can really recommend every doctoral student to take advantage of the opportunity for a short research stay and the funding opportunities offered by the TUD Graduate Academy. Personally, it supported me in an important phase of my doctorate and opened new doors for me.

5. What are the next steps on the way to completing the PhD and do you already have plans for after the PhD?

I hope to complete my PhD in early 2023. From January 2023, I will work at the EURAC Research Center at the Institute for Renewable Energy in the Group Energy Systems Modeling. The institute is mainly funded by EU Horizon projects. From there, I hope to be active in the international energy economics and energy systems modeling community in the future, and in particular to use the network to TUD and the Chair of Energy Economics. I am looking forward to the new tasks, although at the same time I am very sad that my days at the Chair of Energy Economics are counted. But as I said, due to the thematic proximity, we will certainly remain in close contact and exchange, which will make it a little easier for me to say goodbye.