Establishing industrial community energy systems: Simulating the role of institutional designs and societal attributes

The importance of decreasing industrial CO2 footprints has become evident, as also highlighted in COP26. As such, the transition to renewable energy in the industrial sector is essential to meet the targets. To this aim, establishing industrial community energy systems (InCES) where industries collectively invest in a shared energy system is an economically and environmentally attractive option. Yet, the emergence and continuity of such collective initiatives among industrial companies has neither received considerable attention in the scientific literature nor in practice. This research, as the first of its kind, aims to investigate institutional design options that allow for such collaboration to take place for the establishment and continuity of an InCES. Given the bottom-up and collaborative nature of such initiatives, we take an agent-based modeling and simulation approach, for the first time in this area, that incorporates the institutional and societal attributes that influence the formation and continuation of an InCES. We take data from an industrial cluster in Arak, one of the most prominent industrial cities in Iran. The results of this study confirm the economic feasibility of an InCES as compared to individual renewable energy investment in the cluster. The results also highlight the importance of flexible membership in increasing the number of investors (i.e., industrial companies) in such initiatives. Other important recommendations are: considering the installation of at least 15% extra capacity for the powerplant, restricting electricity consumption and enforcing on-time payment of monthly premium fees.

Automated summary

The importance of reducing industrial CO2 footprints has been recognized, especially in the context of COP26. A transition to renewable energy in the industrial sector is crucial to meet climate targets. In this regard, the concept of industrial community energy systems (InCES), where industries invest in a shared renewable energy system, emerges as an economically and environmentally attractive option. However, there is a lack of research and practical attention to the emergence and continuity of such collective initiatives among industrial companies. This study investigates institutional design options to facilitate collaboration for the establishment and sustainability of InCES, using agent-based modeling and simulation approach, incorporating institutional and societal factors. Data from an industrial cluster in Arak, Iran, demonstrates the economic feasibility of InCES compared to individual renewable energy investments in the cluster, emphasizing the importance of flexible membership and implementing additional capacity, consumption restrictions, and timely payment.