German industry has significant potential for flexible electricity consumption

German industrial electricity consumers have significant untapped potential to provide flexibility by managing their consumption. If they were willing to adjust their consumption flexibly, this would support the development of renewable energy sources and would probably also lead to lower grid charges. Clean Energy Wire reports, citing the results of a survey by consultancy McKinsey.

According to McKinsey, German industrial electricity consumers, including carmakers, chemical companies, paper mills and steelworks, could temporarily reduce their electricity consumption by a total of 5 to 7 GW if needed. This would reduce Germany’s peak load by 10 to 15%.

A McKinsey survey of around 400 industrial consumers found that up to 60% of this potential could be realised within 3 years. That is significantly sooner than the planned dispatchable gas-fired power plants are expected to become available.

McKinsey also estimates that industrial companies could reduce their electricity costs by increasing production when electricity prices are low or even negative. However, two thirds of the companies surveyed are not yet considering this option.

A change in how power systems operate

Most power systems around the world operate on the principle of dispatchable generation adjusting to volatile electricity demand. This system works well when sufficient dispatchable capacity is available, such as coal- and gas-fired power plants, and storage and pumped-storage hydropower plants.

However, as variable renewable sources such as solar and wind power expand, flexibility will also be needed on the electricity demand side. The way power systems operate will therefore change considerably, with electricity demand seeking to adapt to generation. Battery storage can help partially align generation and consumption over periods of hours to days.