Ruike Lyu

Ruike Lyu, Anna Li, Jianxiao Wang et al.

In many countries, declining demand in energy-intensive industries such as cement, steel, and aluminum is leading to industrial overcapacity. Although industrial overcapacity is traditionally envisioned as problematic and resource-wasteful, it could unlock energy-intensive industries' flexibility in electricity use. Here, using China's aluminum smelting industry as a case study, we evaluate the system-level cost-benefit of retaining energy-intensive industries overcapacity for flexible electricity use in decarbonized energy systems. We find that overcapacity can enable aluminum smelters to adopt a seasonal operation paradigm, ceasing production during winter load peaks that are exacerbated by heating electrification and renewable seasonality. This seasonal operation paradigm could reduce the investment and operational costs of China's decarbonized electricity system by 23-32 billion CNY/year (11-15% of the aluminum smelting industry's product value), sufficient to offset the increased smelter maintenance and product storage costs associated with overcapacity. It may also provide an opportunity for seasonally complementary labor deployment across the aluminum smelting and thermal power generation sectors, offering a potential pathway for mitigating socio-economic disruptions caused by industrial restructuring and energy decarbonization.

Ruike Lyu, Chuyi Li, Kedi Zheng et al.

Virtual power plants (VPPs) are important for coordinating the rapidly growing portfolios of distributed energy resources (DERs) and enabling them to deliver multiple services to higher-level electricity markets. However, profit allocation procedures for VPP participants become increasingly difficult to design in an incentive-compatible manner, owing to the increased market power of DERs within each VPP relative to their direct participation in wholesale markets. In this paper, we introduce translation symmetry in electricity markets and apply it to VPP aggregation of DERs for market participation to design an incentive-compatible profit allocation method. Under the stated assumptions, we prove that this translation symmetry induces an inductive property: once incentive compatibility holds at an upper level, it propagates to the internal settlements between the VPP and its constituent DERs, thereby supporting incentive compatibility throughout the hierarchy. We further show that service prices are invariant across levels, which helps preserve competitive conditions and enables transparent value assessment. Theoretical analysis and case studies illustrate how this translation-symmetry-based approach can enable incentive-compatible profit allocation when aggregating DERs to provide multiple services.