IRPopt

Integrated resource planning and optimisation

Background

Due to the energy transition and increasing liberalization, business models of traditional energy supply companies are under pressure. Individual companies have set themselves the goal of further developing their existing business model in the direction of offering and providing energy management services. However, business model innovations often do not get beyond the planning phase. A decisive reason is that innovative business models in the municipal environment must be able to cope with a multitude of influencing factors in order to represent a sustainable solution for the energy system. A possible evaluation is influenced by, among other things, the existing business portfolio, technological progress, the actors involved, the regulatory framework and the market environment at hand. Due to this complexity and the resulting interactions of alternatives, the holistic development of business models is of great importance. Computer-aided optimization models represent one possibility to support decision-makers. In this context, adequate models have a coherent concept that allows the theoretical representation of the decisive system properties. The increase of decentralized feed-in and self-supply systems even increases this necessity, as the flexibility and coordination efforts of the business models increase. The changes require the development of innovative business models that open up advantages for various participating actors along the value chain, while at the same time taking into account the changing technical and regulatory market environment. In this respect, existing optimization models neglect essential modelling approaches:

• Explicit integration of actors in municipal energy systems:

The expected decentralization can also be advantageous for energy suppliers if the different interests and requirements of the individual actors are reconciled, who no longer only consume but also produce. The associated risks are to be assessed by drawing on the commercial contractual relationships from an actor perspective along the value chain. The focus should not only be on the well-known investment of end customers in their own decentralized solutions (for example, by homeowners or commercial entrepreneurs), but also the joint investment in sustainable solutions (e.g. by citizen participation companies). New business models must therefore be evaluated from the perspective of different stakeholder roles, such as the energy supplier and industrial, commercial and household customers. Provided that the actors involved benefit as a whole, these actors are more willing to participate in the innovative business models and thus in sustainable solutions.

• Comprehensive integration of innovative business model opportunities:

The trends in the context of the energy transition call for a comprehensive reorientation of the business activities of energy suppliers. In the future, business models should be evaluated in an integrated manner, i.e. different legal uncertainties with regard to, for example, the commodity price and performance price systems must be considered together. New cost and revenue models should also be variable. Furthermore, in this context the evaluation of individual business models should not be carried out alone, but always within the framework of the existing business situation and also taking into account other planned business models. Only in this case can possible synergy and competition effects be identified. Among other things, the idea of providing storage solutions and simultaneously rolling out heat pumps can represent a reduced revenue effect for the storage solution. New modelling approaches should thus create the possibility to flexibly model innovative business models (direct marketing, tenant electricity, neighbourhood storage, load shifting, electric mobility, virtual power plants...) as well as their market-related uncertainties (legal framework, cost and revenue models, spot market arbitrage and reserve market revenues).

Modelling objective

The techno-economic optimization framework IRPopt (Integrated Resource Planning and Optimization) aims at the integrated assessment of innovative business models under consideration of changing energy economic and political framework conditions. While existing optimization models neglect the different roles as well as the resulting influence of different market actors, IRPopt allows the explicit inclusion of actors for the evaluation of business models from different actor perspectives.

Approach

The model structure of IRPopt combines different approaches of proven municipal, energy-economic models on the one hand, but also extends these with new modelling approaches within the framework of six modelling levels: 1. Actor roles, 2. Component properties, 3. Component relationships, 4. Coordination systematics, 5. Market principles as well as 6. Environmental conditions. While a proven graph-based approach enables the accurate representation of the cross-sector and cross-technology energy system, a graph-based approach based on it allows the explicit integration of the actor-related interaction. The conceptual implementation is thus carried out by modelling technology components on one model level and the actors on another model level. The subsequent definitions of contractual relationships and flow directions manage the necessary linkage within and between the levels. In addition, a selection of modelling approaches offers the realistic representation of market principles with regard to decentralization, virtuality and flexibility. In interaction with the generic optimization system, the mixed-integer optimization model IRPopt supports the flexible modelling and evaluation of business models, taking into account the framework conditions of the market as well as the degrees of freedom of the actors with the help of a multi-level approach.

Thus, IRPopt enables the endogenous determination and iterative optimization of subsystems from different actor perspectives. Furthermore, the separation of the economic and technical levels allows the modelling of novel business models. In addition, the integrated optimization using energy flows, power measurement and operating states also enables a deeper insight into the evaluation of these business models.

The implementation of the technical modules was based on the modelling language GAMS/CPLEX (General Algebraic Modelling System), which enables the solution of mixed-integer problems in high temporal resolution with sufficient performance. In order to ensure the long-term applicability of IRPopt, importance was also attached to the quality features of user-friendliness, compatibility and scalability. For this purpose, the energy system model was embedded in a web application, which was realized as a classic client-server architecture consisting of a web frontend (client) and a backend (server). The frontend represents the user interface and enables the user to control the simulation through scenario and parameter management. The backend realizes the parameterization of the domain-oriented models and controls the data management as well as the data input and output. The communication between client and server components is realized via common internet technologies.

Benefits

For demonstration purposes, IRPopt was applied to the business models of load shifting and neighbourhood storage, among others. The model-based flexibility evaluation is carried out within the framework of different scenarios from the business field and household customer perspective. The optimization results of the business model load shifting show that in the case of very dynamic tariff models, a low economic added value is to be expected if both groups of actors want to profit. The duration and intensity of load shifting are based in each case on the practical feasibility for households. In the neighbourhood storage business model, economic success according to the optimization results is only possible if the required legal tax code is taken into account and if both groups of actors make optimal use of the storage. In this respect, the simultaneous selection of different flexibility options also has a negative impact on the profitability result. The use cases demonstrate above all the modelling possibilities of the presented optimization model. Furthermore, the results also underline the usefulness of the developed optimization approach.