Raising the Resilience of Industrial Manufacturers through Implementing Natural Gas-Fired Distributed Energy Resource Systems with Demand Response

Abstract

The use of relatively small-scale distributed electric power generation sources is one of the key focus areas in the development of global industry and regional power generation. By integrating distributed generation sources into their on-site energy infrastructure, industrial consumers gain new characteristics and possibilities as entities of the power system that do not only consume power, but in fact can flexibly generate and deliver electricity to local and even centralized grids. This type of entity is called a distributed energy resource system with demand response (Russian: ‘active energy complex’). The purpose of this study is to lay the methodological foundation for the use of distributed energy resource systems with demand response in industrial sites under existing gas and power market conditions and for ensuring the synchronization of parameters that is necessary for managing complex energy consumption. This article provides an empirical study of the principles of the natural gas pricing under the demand volatility of regional markets and the Russian Mercantile Exchange. The article outlines the key drivers, as identified by the authors, that impact gas consumption by a distributed energy resource system, including demand characteristics, limitations and capacity of the gas network and the mode of gas consumption by an industrial enterprise and its generator. Accounting for all of these factors is essential for effective management and proper operational adjustment of a distributed energy resource system with demand response. The result of the study is a proprietary model and a tool for the management of distributed energy resource systems in integration with the gas demand management, which analyze the internal and external parameters of the industrial entity’s operations and its distributed energy resource system, as well as factors existing in the integrated distributed energy system where the consumer is able to buy natural gas in various market segments. The proprietary tool of distributed energy resource system management is based on the centralized control system, which combines performance analytics, operational scheduling of production and the distributed energy resource system, price planning for the wholesale and retail power markets, regional gas markets and exchange, monitoring all elements of the system, and assessment of different active energy management scenarios under various external and internal conditions impacting production and energy demand. Our proprietary tool has been successfully tested in a typical industrial site and was reported to deliver a significant electricity and gas cost-saving effect, which amounted to an 18 percent reduction in the total energy costs of the company, or more than USD 2.6 million per year. The resulting saving effect can recoup the costs of investing in a distributed energy resource system, including construction and installation of the local grid and automation infrastructure, and can be obtained in any country of the world.