Electrification and flexibility are critical to decarbonising both industrial and electricity systems.

 

But what happens when we combine the two?

 

Industrial flexibility will play an increasingly important role as industry moves towards electrification.

Download the reportDownload the summary

About the report

Electrification and flexibility are critical to decarbonising both industrial and electricity systems. But what happens when we combine the two? Industrial flexibility will play an increasingly important role as industry moves towards electrification.

This report examines demand response as a key strategy for phasing out fossil fuels in electricity systems, especially as we integrate more intermittent renewables. If electricity supply cannot always meet demand, then demand will have to adapt – and large industrial consumers have a big role to play.

Challenges and opportunities of flexibility

Flexibility is not without its challenges. Interdependent processes, cyclical production schedules, efficiency losses and higher capital costs are just some of the obstacles. But with these challenges come opportunities, such as financial incentives for flexibility, lower operating costs and reduced carbon intensity of off-peak electricity.

Flexibility does not necessarily lead to a loss of production

This report analyses different scenarios for electro-intensives industries: aluminium and steel. Its results challenge the misconception that flexibility leads to a loss of production. In fact, for these sectors, most scenarios showed no reduction in volume output.

 

  • In primary aluminium smelting, the strong link between energy input and production, together with the physical constraints of the smelting process, limits the ability of these operators to fully engage in demand response. However, emerging retrofit technologies show promise in enabling these industries to provide regular and intense flexibility to the power grid.
  • In contrast, hydrogen-based steelmaking offers immense flexibility potential. Unlike aluminium, where flexibility comes from adjusting energy inputs, steelmakers can balance feedstock between virgin iron and scrap. This allows them to shut down equipment completely and reduce their energy consumption by more than 80% for several hours each day, depending on the proportion of scrap used.

A necessity to adapt for industrial operators

Overall, the concept of flexibility may seem like a tough adjustment for industrial operators, but a necessary one to achieve a truly fossil-free electricity system. Industry, as well as other sectoral end-users, will eventually need to synchronise their activities with the availability of renewables.

Key takeaways

  • To maximise renewables integration and cost-effectively upgrade grids, non-fossil flexibility instruments must replace traditional capacity mechanisms to reduce reliance on thermal power for balancing and ancillary services.
  • Building flexibility into industrial processes requires new strategies, from oversizing machinery to storing excess production.
  • Due to the wide variation in operating costs, efficiencies and profit margins between plants, fair compensation for demand response requires tailored bilateral negotiations with grid operators, as a one-size-fits-all approach is impractical.
  • Industrial flexibility does not necessarily lead to lower production output.
  • Investment in additional renewable capacity is critical to avoid overloading the grid and triggering thermal generation.
  • Industry participation in demand response is only the first step towards a fully flexible, fossil-free electricity system.

Related publications

Innovation’s Black Friday

Innovation’s Black Friday

The EU’s Innovation Fund, launched in 2020, is one of the world’s largest programmes funding...