Can industrial overcapacity enable seasonal flexibility in electricity use? A case study of aluminum smelting in China

2025-11-27

AI Summary

This study investigates whether industrial overcapacity can be transformed into a seasonal flexibility resource for power systems to support economic efficiency and employment stability under carbon neutrality goals. Focusing on China’s electrolytic aluminum industry, it proposes reconceptualizing traditionally “stranded” overcapacity as dispatchable load—enabling temporary curtailment during winter peak demand to provide interseasonal balancing. Using integrated energy system modeling and multi-scenario analysis, the study quantifies impacts on power system investment and operational costs, as well as labor force volatility in aluminum smelting and coal-fired power generation, under a 2050 net-zero scenario. Results indicate annual power system cost reductions of ¥1.5–7.2 billion and up to 62% mitigation of cross-sector workforce fluctuations. The key contribution lies in the first systematic framing of industrial overcapacity as a novel, seasonally scalable flexibility asset—thereby extending the temporal and spatial scope of demand-side response and enriching its policy implications.

Technology Category

• Machine Learning: Scalability of ML Systems
• Search and Optimization: Algorithm Configuration
• Planning, Routing, and Scheduling: Optimization of Spatio-temporal Systems

Application Category

• Economics, Online Markets and Human Computation: Cost models of using LLMs in production systems
• Systems and Infrastructure for Web, Mobile and WoT: Energy management for devices in mobile Web and WoT environments
• Graph Algorithms and Modeling for the Web: Efficient manipulation of static and dynamic Web-related graphs

Abstract

In many countries, declining demand in energy-intensive industries (EIIs) such as cement, steel, and aluminum is leading to industrial overcapacity. Although overcapacity is traditionally seen as problematic, it could unlock EIIs' flexibility in electricity use. Using China's aluminum smelting sector as a case, we evaluate the system-level cost-benefit of retaining EII overcapacity for flexible electricity use in decarbonized systems. We find that overcapacity enables smelters to adopt a seasonal operation paradigm, ceasing production during winter load peaks driven by heating electrification and renewable seasonality. In a 2050-net-zero scenario, this paradigm reduces China's electricity-system investment and operating costs by 15-72 billion CNY per year (8-34% of the industry's product value), enough to offset the costs of maintaining overcapacity and product storage. Seasonal operation also cuts workforce fluctuations across aluminum smelting and thermal-power sectors by up to 62%, potentially mitigating socio-economic disruptions from industrial restructuring and the energy transition.

Problem

• Evaluates industrial overcapacity for flexible electricity use
• Assesses seasonal operation in aluminum smelting for decarbonization
• Analyzes cost-benefits and workforce impacts in energy transition

Innovation

• Seasonal operation paradigm for aluminum smelting
• Overcapacity enables flexible electricity use in decarbonized systems
• Reduces system costs and workforce fluctuations significantly