For three years, the European Copper Institute has worked with seven partners in the IndustRE consortium to develop solutions for the effective decarbonisation of industry. Rooted in the concept of redesigning industrial processes to use higher shares of renewable electricity, a tool set has now been developed for companies to use as part of their decarbonisation strategy.
A series of business models has been identified and described. These refer to opportunities for electricity-intensive industry to save money and generate income by offering flexibility to the electricity grid. Removing barriers for their implementation is certainly worth the effort, as the associated benefits for the electricity system range between two and four billion €/year (a similar order of magnitude to the investment needed in EU transmission assets, i.e. 7 b €/year, according to the Ten Year Network Development Plan by ENTSO-E).
However, the benefits are not only at grid level. Reductions of around 4% are possible in the energy bill of industries that make 15% of their demand flexible. Energy intensive industries usually work with very narrow margins and such a cost saving could be very relevant. If you want to assess the potential of your company, a simplified methodology (ProFLEX) will give you a fast assessment of the savings potential.
Finally, IndustRE can now share policy recommendations, which can help to deliver the potential savings identified:
- On market access, it is important that large consumers have direct access to wholesale electricity markets (day-ahead and intraday markets), or alternatively through aggregation. They should also be able to participate in reserve and balancing markets, as well as in capacity remuneration mechanisms, under fair technical conditions.
- Tariffs also play a key role. Cost-reflective network tariffs with a fixed charge (€) plus a peak-coincident capacity charge (€/kW) are recommended. Other regulated costs included in the tariff and not affected by changes in electricity consumption or injection should be removed from the volumetric (€/kWh) component of the tariff.
- The possibility to self-generate with on-site renewables should be fully allowed, but net metering policies should however be abandoned. Combined with the above tariff recommendations, self-generation does not represent a threat to the electricity grid viability.
- Finally, EU-wide harmonization of flexibility mechanisms is needed.
We are pleased to see that many of these recommendations have been introduced in the new market design rules proposed by the European Commission. Together with this, the advent of highly competitive renewables is pushing more and more companies to procure green power. Decarbonisation is happening today and can create high value for flexible industries.
To get in touch with the IndustRE consortium and use the flexibility tool to assess your company’s potential, click here to send an email. Within a few hours, you can be provided with an estimate of the opportunities, and can look into business models and contractual arrangements accordingly.
The IndustRE project in short
IndustRE has identified the flexibility potential of industrial electricity demand as an opportunity that—through innovative business models—can facilitate further growth and integration of variable renewable energy, while reducing industrial electricity costs. In this project, the electricity intensive industry in Europe works closely with the renewable energy sector in order to find common ground and create win-win situations.
The IndustRE Partners
- Becker Büttner Held
- Comillas Pontifical University
- European Copper Institute
- Imperial College London
- SCM Group
- Vito Energy