Produce when renewables deliver electricity

Process engineer Thorsten Lenck says that he sees untapped potential to make energy consumption flexible at nearly every production site he visits. Lenck has seen numerous industrial operations from the inside and has served as energy policy advisor to businesses for years. Today, he analyses the potential of renewable energy and the design of the electricity market at Berlin think tank Agora Energiewende. His impression is that “so far, being flexible in using electricity has played far too small a role in the energy transition.”

Is consumption being neglected?

Lenck is of the opinion that the debate surrounding the optimal use of volatile energy from the wind and sun has a supply-side focus, which is too one-sided. On-demand electricity, for example from coal and gas power plants, is supposed to close the supply gap resulting from the wind and sun producing too little energy. The medium-term outlook has electricity coming from storage systems which are replenished during periods of surplus wind and solar energy. However, becoming completely independent of fossil energy would require enormous storage capacities to be built, which are still very expensive.

Lenck finds that energy transition costs could be lowered if consumption became more flexible. In fact, he is convinced that industry, the no. 1 power consumer, could make a major contribution to this. Lenck states that ” in most operations, it doesn’t matter whether certain process steps are performed in one or two days,” citing as examples a brewery that obtains brewing water from a well preferably when substantial amounts of green electricity are put on the system. The liquor is stored in a surface tank until it is mixed with the wort to produce the finished product.

Lenck adds that meteorological forecasts can be used to plan such steps extremely reliably. He believes that some operations could make up to 50 percent of their consumption flexible by making the right investments – without curtailing the main production processes or, in turn, machine capacity utilisation.

Refrigeration logistics companies set an example

Arne Grein, Head of Energy Markets at Berlin-based consultancy Ökotec Energiemanagement, finds this assessment to be extremely optimistic: “This may well be possible in isolated cases, but right now, only a handful of companies are willing to spend the sums necessary to do so.” Based on Grein’s assessment, so far only a few sectors are candidates for intensive load management, which aims for the increased use of green energy, one being refrigeration logistics.

“Some refrigeration and frozen storage warehouses can operate without nearly any electricity at all for four to five hours a day,” says Holm Riedel, who sits on the Board of Management of Energeering AG. The company, which is domiciled in Mülheim an der Ruhr, specialises in helping energy-intensive electricity and gas customers optimise consumption.

Heat storage is cheaper than electricity storage

Load management, explains Riedel, is a proposition that appeals above all to the field of refrigeration logistics because heat and cold storage is relatively simple and cheap. This is also a household phenomenon: hot drinks easily maintain their temperature for half a day in a thermos flask – without drawing any energy. Conversely, electrical appliances stop working as soon as they are unplugged.

The thermos principle can be applied to refrigeration logistics as well as other areas, Riedel claims: “Wherever process heat of low temperature – up to about 130 degrees – is needed, simple water storage systems can enable energy consumption to become flexible and more efficient.” To date, most operations generate process heat using boilers or combined heat and power (CHP) plants – usually running on gas. Excess heat at the end of a process is often released into the atmosphere. A simple heat storage unit would reduce energy consumption significantly, claims Riedel. Using electric heat pumps instead of CHP plants would enable fairly flexible use of green electricity to generate heat.

Grid relief is actually lucrative

Even though operations can already avail themselves of attractive options, the three experts agree that companies lack incentives to make such investments: On average, spreads on the energy exchange (differences between the lowest and highest electricity price during a relevant period) are too low. To date, the few attractive windows in any given year, during which electricity prices skyrocket as they did in December 2020, have not provided a basis for long-term investments that would allow one to do without electricity in such situations.

This type of constellation is becoming more frequent, but so far, it has not led to an investment case for most companies – in part because the wholesale price accounts for a relatively small portion of the total price of electricity, which includes network usage fees, the renewable energy apportionment, electricity tax and further levies. Holm Riedel claims that companies can actually save much more money in terms of network usage fees than electricity prices, for example by being compensated for reductions in consumption during peak load periods.

Flexibility possible on a large scale

This is precisely the modus operandi at aluminium manufacturer Trimet. A new method enables the Essen-based family-owned company to increase or throttle electricity usage in aluminium production by up to 25 percent for a maximum of 24 hours. Again, this is made possible by the inertia of thermal energy.

Although this primarily involves cushioning peak loads in order to stabilise the power grid and relates to the usage of renewable energy only indirectly, Agora Energiewende’s Thorsten Lenck believes that “the example shows that electricity usage can be made flexible on a large scale as well.” And the Trimet standard is remarkable: Based on research conducted by radio station Deutsche Welle, the Essen-based aluminium smelter consumes as much electricity as the rest of the 600,000 resident city – including other industrial operations.

Increased incentives conceivable

Holm Riedel is of the opinion that framework conditions would have to change in order for the topic to kindle the interest of further companies: “If adjustments were made not only to network usage fees but also the other electricity price components to bring them in line with the availability of green electricity, rendering power consumption flexible would definitely be considered a business case for a greater number of companies.”

One reason is the constant rise in the share of renewable energy and the progress of grid expansion. So, weather conditions permitting, we will see an increase in available electricity from renewables going forward. If weather conditions prove unfavourable, less electricity will be available as fewer power plants will provide base-load electricity. This should cause spreads to grow and provide an incentive to invest in the increased use of cheap electricity. The rising price of carbon dioxide will probably magnify this effect.

Ökotec’s Arne Grein claims that the proliferation of green PPAs is an opposing trend. Large consumers secure constant prices for electricity from renewables through such long-term power purchase agreements. “This eliminates the incentive to opt for sophisticated load management,” says Grein. In the end, the legal framework will be instrumental in determining how interested industry will be in tapping into the potential harboured by the flexible use of energy.