Incentivizing the Adoption of Local Flexibility Options: A Quantitative Case Study

Abstract

Energy systems with a large share of generation from renewable sources require a flexible behavior of the demand side. Office buildings can technically contribute by the installation of local generation and storage in combination with energy management systems. However, businesses will only consider the adoption of flexibility options if there is a clear monetary benefit. We evaluate different combinations of flexibility options for a typical medium sized office campus in Germany regarding the incentives provided by different electricity pricing models. We model the campus using a mixed integer linear programming (MILP) formulation and assume perfect foresight. We find that even for the traditional static pricing model the adoption of flexibility options is beneficial. However, dynamic pricing models provide substantially larger incentives while prices close to the wholesale price render the investments unprofitable.