Impact of Economic Incentives in the Power System on Small Companies

In the ongoing transition towards increased electrification and a higher share of variable renewable electricity production, the Nordic power system is facing growing challenges related to power balance and frequency stability. Traditionally, flexibility and frequency control have been provided by large generation units. However, small and medium-sized companies are increasingly recognized as a potential source of demand-side flexibility. The economic value of such flexibility depends on how different economic incentives, tariff structures, and market mechanisms interact. This study investigates how flexible electricity consumption in a commercial facility can be used to reduce total electricity costs and create additional revenue opportunities under current Swedish market conditions. The analysis is based on measured hourly electricity consumption data to compare the current operating pattern with various optimization and market participation scenarios. About 50% of the hourly load, mainly from heating and ventilation systems, is considered flexible, while the rest is non-flexible. Results indicate that grid-tariff-driven optimization can lower electricity costs by reducing demand peaks during High-Load (HL) periods in seasonal months, resulting in annual savings. Load shifting based on spot prices further reduces electricity-trading costs, though more aggressive strategies might increase peak demand. A combined assessment shows that optimization focused on grid tariffs results in larger total cost reductions than spot-price-driven strategies alone, but it also shows the risk that reducing one cost component may increase another, which can be difficult for smaller companies to manage in practice. The study also addresses the potential for additional revenues from ancillary services, focusing on Frequency Containment