Economic potential of Demand Response for office buildings in the Netherlands

Abstract

To combat imbalances in the electricity grid and support the integration of renewable energy sources, demand response (DR) is increasingly being looked at as a key solution. Electricity consumers can change their electricity consumption pattern based on dynamic prices to help stabilize the grid and reduce their energy bill. This study focuses on the economic potential of demand response for office buildings in the Netherlands. A model of an office building has been developed in Matlab, containing a thermal model of the building and models of the Heating Ventilation and Air-Conditioning (HVAC) system, employees' electric vehicles (EVs) and employees' laptops. These assets can be operated flexibly, in reaction to dynamic prices. The office buys its electricity on the Dutch day-ahead market and can subsequently also trade on the automatic frequency restoration reserve (aFRR) markets. Multiple control strategies have been considered: a reference control strategy, a rule-based strategy and a Model Predictive Controller, with the objective of minimizing the electricity costs while maintaining indoor comfort and respecting battery capacity boundaries. Running yearly simulations with various variations in input, a number of conclusions can be drawn: 1) The economic profitability is highly dependant on the simulation year. Profits of DR are at least ten times higher in 2022 than 2019, due to higher electricity prices and increased variability in the price. 2) The HVAC is best controlled by the MPC, but the MPC leads mainly to energy consumption reduction instead of consumption pattern shifting. This combination can also have high investment costs, although this strongly depends on the HVAC hard- and software already installed in the office. 3) EVs have a lot of DR economic potential for office buldings as investments are low and the electricity consumption is high and easily shiftable. Additionally, the EV penetration level is expected to rise quickly the coming years in the Netherlands. 4) Laptop DR is barely profitable in the day-ahead market, but performs well in the aFRR market. 5) Total electric vehicle DR profit in 2022 is around 7,500 euros, and HVAC DR profits lie at 2,000 euro for a 4,000 square meter office. Considering the revenue of a 4,000 sq. m office is in the millions, the profits are not enormous but there is economic potential and the profits will increase with higher EV penetration.