Anne Nysaether, Elvia, Sofia Tavares, EDP, and Michael Villa, smartEn, give a brief outlook on their EM-Power Europe Conference session.
In the future millions of large and small wind power and solar installations will be the heart of our energy supply. At the same time, as e-mobility and electrical heating is booming, the number of consumers is on the rise. Integrating all these distributed energy resources (DER) into the grid is both a challenge and an opportunity for a stable power supply. At the EM-Power Europe Conference on June 13 and 14 in Munich, renowned experts will discuss how to develop DERs to their full potential and facilitate the active participation from consumers. After all, making greater use of demand-side flexibility (DSF) would bring many benefits to the energy system. In the run-up to the conference, we asked speakers of the session “Distributed Energy Resources & Consumer Empowering” for their views.
Anne Nysaether: From a DSO perspective, the prosumer should have a close relationship to both their smart home vendor (aggregator) and the DSO. Data voluntarily given from the prosumer to the DSO and aggregator will lay the grounds for better and more accurate communication between the parties. In addition to this, the prosumer must have easy and understandable access to information about their actual benefits from participating as a flexibility provider. These are new areas for the consumers as well as for DSOs, so piloting and sharing experiences is vital. Grid tariffs which reflect actual grid costs and gives the prosumer an incentive to flatten their consumption profile is an important starting point. From there more advanced incentives from the electricity price and flexibility payments from both the DSO and the TSO can develop further.
Michael Villa: Digitalization and automation will make all the difference. To activate the flexibility of our home devices whether that is a heat pump, home battery, dishwasher, fridge or electric vehicle, we do not necessarily need to be aware of price fluctuations throughout the day and adapt our behaviour accordingly. Flexibility service providers are companies that activate and verify the flexibility of consumers by relying on smart meters and/or sub-meters embedded in individual assets. If they are able to participate, active consumers engaging in flexibility schemes could benefit up to € 71 billion every year and all consumers, even those that do not participate in any flexibility activation, would also benefit from lower wholesale prices and system costs, amounting to over € 300 billion per year. With flexibility service providers managing the flexible loads, consumers' interaction wouldn't be more cumbersome than setting a thermostat is today.
Sofia Tavares: Given the current stage of development, it is natural for scepticism to arise as demand-side flexibility is not yet adapted to the needs of energy consumers. We can overcome this challenge by integrating intelligence into the system. By doing so, we can optimize and tailor decision-making processes. Through actionable insights, consumers become able to make well-informed choices, alleviating any concerns about disruption or inconvenience. Moreover, it fosters active participation by helping consumers grasp the associated financial benefits. However, it is also crucial to establish technological compatibility among various components of the prosumer system, including solar panels, EV, batteries and grid infrastructure. This simplifies the process for consumers to receive and act upon relevant information, seamlessly integrating their devices into the demand-side management system.
Anne Nysaether: There are a few commercial pioneers who offer the customers good value by presenting information about their benefits from participating as a flexibility provider. In Elvia, we believe that also the DSOs should have direct communication with the customers and pilot together with them. Thus, we have developed our own app which gives the customers information about their production and/or consumption as well as their costs.
Michael Villa: smartEn regularly maps and monitors the development of demand-side flexibility across Europe. There is no simple reply as flexibility can be activated through a wide spectrum of schemes, such as dynamic price tariffs, explicit participation to wholesale markets, following the procurement for flexibility services by DSOs, the participation to a TSO's balancing market or energy community schemes. No Member State in the EU27 has an ideal enabling framework in place on all of these possible opportunities to activate flexibility, but France and Finland are well positioned to stand out in a wide variety of options.
Sofia Tavares: The energy transition has been gaining momentum worldwide, with Europe particularly concerned with accelerating its energy independence and security on top of its climate commitments. Renewable generation is a central element in achieving these goals, and decentralization is vital for a successful transformation. Rather than focusing on specific countries, it is important to highlight the EU's universal green policies that are being implemented and are contributing, for example, to a significant growth in solar distributed generation. But it is also worth highlighting the very relevant role of the private sector in promoting innovative and flexible business models – such as local energy communities and the "As a Service" modality – which democratize and de-risk access to renewable energy for consumers who may not otherwise be able to invest. This pioneering spirit is crucial for the energy transition, as is the investment in the scale up of new decarbonization technologies.
Anne Nysaether: The DSO's should be financially incentivized to pilot DER, as this will drive innovation in the field and give important knowledge. In Norway, R&D is part of the regulation giving DSOs incentives to learn from piloting without negative financial consequences. The regulatory framework should also incentivize the participants to use and contribute to improve standards in the communication between the components of the DER landscape. This will, in our opinion, drive innovation forward by removing the need for extensive use of customised coding when participants can use the same code base even in a distributed architecture. A newly established industry-owned company in Norway, Elbits, is set out for this purpose and financially incentivized by the regulator.
Michael Villa: Most consumers do not have the possibility to (automatically) adjust their consumption and generation patterns, and are missing out on the potential rewards from playing an active role. The reason for this is twofold. On one hand, many suppliers do not facilitate access to accurate price signals to end-users, while in other cases national rules limit the market-based procurement of demand-side resources by system operators either explicitly or through discriminatory market designs. These are all requirements already set at EU level with clear legislations and obligations, which are poorly implemented at national level. To detail and complement them, a Network Code on Demand Response is currently being developed as well as an Implementing Act on data access for Demand Response to facilitate seamless data flows.
Sofia Tavares: Currently most barriers on DERs and active participation of consumers are more related with a lack of implementation of the existing regulatory framework than on actual gaps in the framework itself. An example of this is the fact that there are Member States that have yet to fully implement the Clean Energy Package directives, particularly regarding collective self-consumption. Still, improving the regulatory framework can enhance the effectiveness of energy-related initiatives. European legislation should foresee to properly frame peer-to-peer energy transactions and consider allocating capacity shares of larger RES generation as self-generation of energy communities. Also, the revised EPBD could consider nearby self-generation, not strictly within the facilities, overcoming limited rooftop space or low sun exposure. Lastly, a thorough analysis could be conducted to foster energy as-a-service and on-bill schemes, thus mitigating investment risks.
The EM-Power Europe Conference session "Distributed Energy Resources & Consumer Empowering" will focus on best practices and innovative projects, both from a grid and user perspective (e.g. energy communities) and will discuss how the regulatory framework can be improved to facilitate the penetration of DERs and active participation from consumers. The session will be held on Wednesday, June 14, 2023, 09:00 am - 10:30 am at the International Congress Center Munich (ICM).