Economic Assessment of Demand Response Using Coupled National and Regional Optimisation Models

Abstract

In this work, we investigate the economic viability of demand response (DR) as a balancing option for variable renewable energies, such as wind and solar. Our assessment is based on a highly resolved national energy system model for Germany coupled with a regional DR optimisation model. First, this allows us to determine the spatially resolved flexibility demand, e.g., for avoiding transmission grid congestion. Second, a high number of DR technologies from the residential, commercial and industrial sector, as well as sector coupling, can be considered to cover the regional flexibility demand. Our analysis is based on a scenario for 2035 with a 66% share of renewable energy sources in the power generation. The results show that the largest DR capacity is being installed in the west of Germany, an area with a high density of population and industry. All DR units have an aggregated capacity below 100 MW per transmission grid node. For the economic assessment, we further differentiate between two cases. In the first case with full DR cost consideration, the optimisation selects only large-scale technologies with low specific investment costs. The second case assumes that the required communication components are already installed. Here, we consider only variable costs and disregard the investment costs. As a result, several small-scale DR technologies are used, such as e-mobility. We publish the developed methodology as an open-source model, which allows reuse for other scientific purposes.