Abstract
The transition of the energy system increases the urgency to cope with the intermittency of renewable energy sources to keep the electricity network balanced. Demand Response (DR) measures are a promising approach to align the electricity consumption, especially of industrial consumers, with current electricity supply. While adequate information systems (IS) are already in place to dynamically adapt electricity consumption patterns, industrial consumers are still reluctant to implement DR measures due to uncertainty of their financial performance. Nevertheless, studies on risk transfer instruments related to DR investments are still scarce. To con-tribute to the closure of this research gap, we examine the risk transfer capability of Flexibility Performance Contracts (FPC). We derive cash flow structures for representative FPC designs, calculate risk premiums and enable the comparison of corresponding risk profiles. Presented FPCs are evaluated based on a real-world industrial use case. Thereby, the financial perfor-mance is modelled stochastically, taking electricity price fluctuation, industrial process charac-teristics and IS-backed decisions into account. Our results reveal that FPCs represent well-suited risk transfer instruments for DR measures. Thus, FPCs have the potential to accelerate the application of DR measures and therefore to complement existing capabilities of IS in the context of electricity networks.
Recommended Citation
Jäckle, Florian; Schoepf, Michael; Töppel, Jannick; and Wagon, Felix, (2019). "RISK MITIGATION CAPABILITY OF FLEXIBILITY PERFORMANCE CONTRACTS FOR DEMAND RESPONSE IN ELECTRICITY SYSTEMS". In Proceedings of the 27th European Conference on Information Systems (ECIS), Stockholm & Uppsala, Sweden, June 8-14, 2019. ISBN 978-1-7336325-0-8 Research Papers.
https://aisel.aisnet.org/ecis2019_rp/175