The transformation of the electricity system towards higher shares of renewable energy necessitates increased flexibility on the demand side. The industrial sector, which accounts for over 40% of Germany's total electricity demand, exhibits significant heterogeneity in terms of production processes, load characteristics and grid use patterns. Consequently, it is considered a primary source of such flexibility. This study examines the economic and regulatory implications of deploying battery energy storage systems (BESS) in industrial settings, focusing on how different grid fee policy frameworks influence operational strategies, total costs of companies as well as their impact on grid operators. Using a mixed-integer linear programming model applied to more than 800 real-world industrial load profiles, we explicitly capture the diversity of industrial electricity demand and assess three regulatory scenarios: the current framework with incentives for atypical and intensive grid usage, and two proposed reforms incorporating dynamic energy prices and revised capacity prices. The objective of the model is a minimization of each company’s annual total costs, with the model deciding how many BESS modules should be built. Results show that BESS adoption leads to an average cost reduction in electricity procurement costs of 14.3%, with some companies reaching cost reductions of over 30%. At the same time companies that make use of atypical grid usage increase their maximum peak load on average by 51.7%, while the average grid fee payments are reduced by 41.6%. It is shown that by removing capacity price components of grid fees and by fully dynamizing energy price components, cost and grid fee payment reductions as well as peak loads are increased significantly. This raises concerns about unintended system effects such as increased network congestion or transformer overloading. In contrast, retaining capacity components supports more equitable cost allocation and reduces the risk of cross-subsidization, whereby smaller consumers subsidize larger, more flexible ones. These findings underscore the importance of cost-reflective grid tariffs that align network charges with underlying system costs, and incentivize grid-friendly behavior. From a policy perspective, economic efficiency ought to be balanced with potential distributional effects, taking into account temporal and locational price signals enabling the efficient deployment of industrial flexibility.
Beranek et al. (Wed,) studied this question.