How can flexible energy procurement contribute to the transformation of industry?

In a new study, researchers from the Fraunhofer ISI and RWTH Aachen have investigated how energy use and production in the industrial sector can become more flexible – especially in view of an energy system that will be strongly geared towards renewable power generation in the future. The focus was on the technical, economic and regulatory opportunities and hurdles. The results and recommendations of the study, which was commissioned by the Competence Centre for Climate Protection in Energy-Intensive Industries (KEI), are particularly relevant in the context of the current reform of grid fees and the long-term safeguarding of the competitiveness of German industry.

German industry is in the midst of a far-reaching transformation to make production processes more climate-friendly in the future. This involves a fundamental reorganisation of energy procurement and industrial facilities. At the same time, the electricity system of the future will be characterised by renewable power generation and a high degree of sector coupling, which poses challenges for balancing electricity supply and demand and greatly increases the need for flexibility. Although flexible electricity procurement offers the potential for reducing costs, it is currently only used by a few companies – mainly because existing plants and process chains are optimised for high capacity utilisation.

In this context, a new study by the Fraunhofer ISI and the Institute for Industrial Furnaces and Heat Technology at RWTH Aachen has qualitatively and quantitatively examined the technical, economic and regulatory possibilities and obstacles to making energy use in the industrial sector more flexible. The study, commissioned by the Competence Centre for Climate Protection in Energy-Intensive Industries (KEI), combines a comprehensive energy system analysis with case studies of individual standardised companies or applications, which, in contrast to earlier studies, ensures a greater practical relevance. It takes a forward-looking perspective on the conversion of industrial production that is currently heavily based on fossil fuels, such as the future electrification of processes in the supply of process heat. The assessment of industrial flexibility is carried out within an energy system that is heavily geared towards renewable electricity generation.

The study finds that energy use and production processes in the primary industry have so far generally been made less flexible, existing production facilities are running at high capacity and optimised for continuous operation. However, case studies conducted as part of the study also show that it is technically possible to make today's production processes more flexible and to electrify process heating systems in the future – although this also entails additional costs. These arise from changes in maintenance and operating costs, investments in additional production and storage capacities, or costs for energy transport. Flexible energy procurement is only possible on a competitive basis if the additional costs incurred are offset by savings.

When it comes to energy procurement, industry is faced with the challenge of integrating renewable energy sources such as hydrogen or electricity into existing production processes that have been optimised over decades. However, complete electrification of many process chains is often not possible in the short term. As a first step, for example, electric steam generators can supplement existing natural gas-fired plants or, in steel production, the direct reduction plants that are currently being constructed can use hydrogen and natural gas flexibly. These so-called hybrid systems, which use several energy carriers and can switch between them relatively flexibly during operation, offer great potential for making industry's energy supply more flexible and thus aligning it more closely with electricity generation from wind and solar energy. In the long term, hybrid systems can make an efficient contribution to the energy system from hydrogen and electricity.

Dr. Tobias Fleiter, who heads the business unit Demand Analyses and Projections at the Fraunhofer ISI
and coordinated the study there, points out further findings: ‘Our results show that the current regulatory framework inhibits the flexibilisation of energy use and production processes in industry because the existing regulations on grid fees create incentives for the highest possible full-load hours and a continuous electricity supply. Therefore, in the future, electricity grid fees should be more closely aligned with the requirements of an energy system characterised by wind energy and photovoltaics.’ Tobias Fleiter also emphasises that load flexibilisation in industry can make an important contribution to the general integration of renewable energies into the energy system. At the same time, it is important to realistically assess the possibilities and to evaluate industrial flexibilities in the context of other options such as storage technologies or cross-regional balancing via the transmission grids.

However, a clear political strategy and investment are needed to ensure that the flexibility potential in industry can be realised. A strategy for increasing energy flexibility should therefore exploit synergies with other policy areas. These include the transformation to climate-neutral production, the resilience of the energy supply and protection against price fluctuations.