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Long-Term Electricity Investments Accounting for Demand and Supply Side Flexibility

Marañón-Ledesma, Hector and Tomasgard, Asgeir (2019): Long-Term Electricity Investments Accounting for Demand and Supply Side Flexibility.

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Abstract

Short-term Electricity Demand Response (DR) is an emerging technology in Europe's Electricity markets that will introduce a new degree of flexibility. The objective of this work is to analyze to what extent the untapped DR potential can facilitate an optimal transition to an European low emission power system. The benefits of DR consists of a reduction in peak load consumption, which leads to reduction in capacity investments, production and consumption savings, reduced congestion phases, reliable integration of intermittent renewable resources and supply and demand flexibility. The capabilities of DR are studied in the European Model for Power Investment with (High Shares of) Renewable Energy (EMPIRE), which is an electricity sector model with a time span of 30 years ending in 2050. The model is two-stage stochastic that includes uncertainty at the operational level and energy economics dynamics at a strategic level. The main contribution of this article is designing the investment-operation DR module within the EMPIRE framework. It models several classes of shiftable and curtailable loads in residential, commercial and industrial sectors, including flexibility periods, operational costs and endogenous DR investments, for 31 European countries. The results show that DR capacity substitutes partially flexible supply side capacity from peak gas plants and battery storage, in addition to enabling more solar PV production.

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