How to thrive without the grid?

Abstract

The electrification of the Dutch chemical industry is essential to meet national and European climate targets. However, limited grid capacity and elevated electricity prices currently hinder large-scale adoption. This research investigates the techno-economic feasibility of powering sub-processes at a Dutch chemical plant with a Local Energy System (LES) that integrates Renewable Energy Generation (REG) and Energy Storage Systems (ESS), as an alternative to grid expansion. The objective is to determine the cost-optimal configuration of Short-Duration Energy Storage (SDES) and Long-Duration Energy Storage (LDES) technologies under various system constraints, including capital investment and operational costs, in order to allow an initial trade-off with conventional grid expansion.

This research developed a year-long optimization model using PyPSA to simulate the lectrification of a 20 MW thermal process by replacing a natural gas boiler with an electric steam boiler. The model runs on an hourly resolution, incorporating 2024 weather data, a fixed industrial demand, and technical constraints related to storage efficiency, lifetime, and discharge duration. It jointly optimizes the installed power capacities of wind, solar, and two distinct storage types: lithium-LFP batteries (SDES) with up to 6 hours discharge, and iron-air batteries (LDES) with discharge time up to 100 hours.

Three LES scenarios were analysed, each with different storage configurations, and benchmarked against a grid expansion base case. Expert interviews validated the modelling approach, and additional sensitivity analyses were conducted to assess the impact of increased energy demand volatility, constrained REG mix, and SDES capital cost reductions.

The model results show that a LES integrating solar and wind power with iron-air LDES can fully electrify a 20 MW thermal load at competitive cost. The cost-optimal power configuration includes 96.5 MW of wind, 32.3 MW of solar, and 29.3 MW of LDES. This results in total annual system costs of €16.83 million, which is 1.5% lower than grid expansion and 37% lower than an SDES-only configuration.

LDES proved to be the most cost-effective ESS to meet stable chemical demand, due to its low energy-specific cost (€20/kWh) and its ability to buffer multi-day shortages. In contrast, lithium-LFP SDES is limited by its higher energy-specific cost (€182/kWh) and short discharge duration, which does not align with the continuous inflexible energy demand of the chemical industry. This leads to excess REG curtailment and the need for oversized power capacity. In contrast to other studies, hybrid ESS setups offered no additional value under the studied chemical conditions. This underscores that the effectiveness of storage technologies is closely tied to demand profiles and the availability of REG.

Sensitivity analysis showed that SDES becomes cost-effective only under high demand volatility (5–35 MW) or when its CapEx drops by at least 20%. Wind is preferred over solar due to better alignment with continuous chemical demand; solar caused system oversizing and comes with high curtailment. The results underline the importance of aligning ESS design with demand profiles and REG availability.

Expert interviews helped to validate the credibility of the model its technical assumptions but also highlighted practical barriers to LES deployment, including spatial constraints, permitting procedures, and additional system costs. These barriers are expected to impact real-world feasibility. They further noted that the current Dutch policy environment weakens the business case for industrial electrification due to high grid tariffs and limited compensation mechanisms.

In conclusion, this research demonstrates that a cost-competitive LES combining wind, solar, and LDES can fully electrify chemical processes without relying on grid expansion. While technically and economically feasible, real-world implementation will depend on site-specific factors and regulatory reform. The developed model offers a valuable decision-support tool for industries and policymakers aiming to accelerate industrial decarbonisation.