Assessment and conceptualization of industrial energy flexibility supply in mathematical optimization in a competitive and changing environment

Abstract

Competitive and changing frame conditions, such as the need for decarbonization of energy supply or the growing share of renewable electricity generation, are driving the need for flexibility in different systems, e.g., in power supply and industrial production. Flexibility is often included in mathematical optimization applications. However, integrating it in optimization may create conflicting understandings of flexibility due to the properties of relativity and goal orientation. Establishing a common understanding of flexibility in industrial systems among all stakeholders, and a general but adaptable formulation for inclusion in mathematical optimization could better exploit the potential for flexibility in the future and make a greater contribution to energy transition. In this paper, an overview of flexibility, the incentives for it, and its integration into the decision variables, constraints, and objectives of mathematical optimization is provided. This enables the authors to conceptualize industrial flexibility in optimization and provide the basis for the presented approach: a three-step mixed-integer linear programming optimization model for integrating flexibility in the evaluation of cost-optimal energy supply systems.

The presented approach is generally suitable for various flexibility types but is applied in this study to assess energy-source flexibility and elaborate its cost implications in a use case from the industry. For the identified energy supply systems with full energy carrier flexibility, the total annual costs increased by 62 to 112% compared to the cost-optimal solution with all available energy carriers, of which a relevant share was due to the investment cost increase by a factor of up to four. The two main conclusions are that (i) the results of the presented use case reveal the order of magnitude in cost increase for energy-source flexible supply systems, and (ii) the presented approach should be further used and developed to evaluate different types of industrial flexibility e.g., analysis of cost increase for robust energy systems in a changing environment, a potential contribution of flexibility for energy markets or power grids, or the flexibility to allow production changes.