The impact of industrial self-supply on Bavaria’s electricity system – effects on supply security and market prices

The purpose of this paper is to analyze the role of industrial self-supply in the transition process from centralized energy generation based on fossil fuels and nuclear power to decentralized supply based on renewable energies in the Bavarian electricity system.

To quantify effects on system and price stability, a model of the Bavarian electricity grid is created and used to simulate electricity system behavior during a 1-year period for scenarios that are characterized by parameter variations in industrial self-supply, nuclear power capacity, renewable power generation and the capacity of electricity imports.

The simulations show that industrial self-supply can reduce instances of maximum grid utilization by 23 per cent and, based on the merit-order effect, decrease electricity market prices by 1.90 and 5.03 €/MWh in the scenarios with and without nuclear power, respectively; these values represent 5.7 and 15.0 per cent of average market prices from 2014.

The analysis shows that industrial self-supply can contribute to transforming the electricity system in a secure, sustainable and affordable manner. However, merit-order-based price effects have a limitation concerning the future applicability of results as quantified effects may not be permanent when the electricity system adapts.

This paper connects industrial self-supply and the merit-order effect within a nodal energy model. It provides insights into the relevant interdependencies and reciprocal effects by means of a simulation.