Competition between simultaneous demand-side flexibility options: The case of community electricity storage systems

TL;DR

This paper evaluates the economic viability of community electricity storage systems considering competing flexibility options like demand response and sector coupling, revealing capacity reductions and market implications.

Contribution

It introduces a scenario-based optimization framework to analyze the impact of flexibility options on community storage economics and capacity.

Findings

Community storage is more efficient than household storage.

Up to 9% capacity reduction per household is achievable.

Flexibility options can reduce storage size by up to 23%.

Abstract

Community electricity storage systems for multiple applications promise benefits over household electricity storage systems. More economical flexibility options such as demand response and sector coupling might reduce the market size for storage facilities. This paper assesses the economic performance of community electricity storage systems by taking competitive flexibility options into account. For this purpose, an actor-related, scenario-based optimization framework is applied. The results are in line with the literature and show that community storage systems are economically more efficient than household storage systems. Relative storage capacity reductions of community storage systems over household storage systems are possible, as the demand and generation profiles are balanced out among end users. On average, storage capacity reductions of 9% per household are possible in the base case, resulting in lower specific investments. The simultaneous application of demand-side flexibility options such as sector coupling and demand response enable a further capacity reduction of the community storage size by up to 23%. At the same time, the competition between flexibility options leads to smaller benefits regarding the community storage flexibility potential, which reduces the market viability for these applications. In the worst case, the cannibalization effects reach up to 38% between the flexibility measures. The losses of the flexibility benefits outweigh the savings of the capacity reduction whereby sector coupling constitutes a far greater influencing factor than demand response. Overall, in consideration of the stated cost trends, the economies of scale, and the reduction possibilities, a profitable community storage model might be reached between 2025 and 2035. Future work should focus on the analysis of policy frameworks.