Creating a flexible grid Marketplace

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Lester Robinson
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University of Cyprus, 13-14 December 2016 With strong

1 Creating a flexible grid Marketplace Henrik Bindner Senior Research Scientist, Research Group Leader TwinPV workshop, University of Cyprus, December 2016 With strong contribution from: Lars Henrik Hansen, Dong Energy Results mainly from ipower SPIR project

2 Outline Markets Existing, integration of DER Market based services FLECH concept FLECH service specification FLECH service verification and settlement Contracts between FLECH Aggregator DER (customer) FLECH prototype status New markets EcoGrid DTU Electrical Engineering, Technical University of Denmark 11 December 2016

$and balanced at all time instances The fraction of renewable energy will increase as$ we are moving towards a fossil free system Wind and solar power has inherent

we are moving towards a fossil free system Wind and solar power has inherent

for electricity Increased consumption and changed consumption pattern Operation of

clarification of responsibilities and a requirement for more formal interaction

3 System challenges and potential solutions I The power system has to be safe, reliable and balanced at all time instances The fraction of renewable energy will increase as we are moving towards a fossil free system Wind and solar power has inherent fluctuations and limited predictability There will be a substitution of fossil fuels for electricity Increased consumption and changed consumption pattern Operation of the power system will increasingly be market based This means a separation and clarification of responsibilities and a requirement for more formal interaction between the involved parties 3 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

$Significant fractions of the electricity consumption$ are associated with some form of intrinsic storage Hot

of buildings, commercial as well as domestic Goods in

stationary batteries By controlling the electricity

required flexibility to shape the instantaneous power

Power consumption can therefore absorb some of the

contribute to enable a power system based on renewable

4 System challenges and potential solutions II Significant fractions of the electricity consumption are associated with some form of intrinsic storage Hot water in the district heating system The heat capacity of buildings, commercial as well as domestic Goods in cold stores Batteries in Electric Vehicles and stationary batteries By controlling the electricity consumption the energy storage can provide some of the required flexibility to shape the instantaneous power consumption to the instantaneous power generation Power consumption can therefore absorb some of the fluctuations from renewable energy and therefore contribute to enable a power system based on renewable energy 4 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

5 ipower - Partners 26 partners, budget 16 MEUR Project period: DTU Electrical Engineering, Technical University of Denmark 11 December 2016

6 What is ipower Control and Market Economic Evaluation FLECH and Aggregation Information Sharing Domestic Demand Response Consumer Behaviour Industrial Demand Response Distribution Grid Operation 6 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

7 What is ipower Control and Market Operation Socioeconomic and Investor Evaluation FLECH and Aggregation Domestic Demand Response Consumer Behaviour Industrial Demand Response Distribution Grid Information Sharing 7 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

8 Market based services Starting point Drivers: Increased power consumption due to electrification. Heat pumps, EVs, battery charging stations, Increased share of distributed generation. PV, micro wind, μchp, Demand participation in energy balancing services (demand response) can create peaks. Etc. ipower boundary condition: to develop and utilize flexible consumption and production solutions which: offer new possibilities for optimal handling of distribution grids. are based on market solutions ensuring an efficient energy system. 8 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

9 Market based services System priorities Power system operating states and state transitions General priority of services: 1. Emergency situations 2. Local constraints/requeirements 3. Global constraints/requeirements 4. Planning and financial aspects Prioritised needs: 1. Emergency actions (TSO) 2. Alert actions (TSO/DSO) 3. Local voltage control (DSO) 4. Peak-shaving (DSO) 5. Voltage support (TSO) 6. Mvar bands (DSO) 7. Frequency control (TSO) 8. Other ancillary services (TSO) 9. Imbalance issues (BRP) 10. Power quality (DSO) 9 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

Market based services Design philosophy Target diverse new services, commercial, but coordinated from system point of view with priority ordering: TSO service may disturb DSO operation, therefore

10 Market based services Design philosophy Target diverse new services, commercial, but coordinated from system point of view with priority ordering: TSO service may disturb DSO operation, therefore priority for DSO DSO services need to be oriented on DSO planning process (not energy market) Avoid situations of market power; don t be more expensive than business as usual Enable potentially for disruptive technology: Energy constrained units (all demand response) Aggregator business models Conclusion: New market player setup for trading flexibility services DSO Distribution System Operator TSO Transmission System Operator BRP Balance Responsible Party DER Distributed Energy Resources 10 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

11 Energy Exchange Stakeholders and roles Transmission System Operators TSOs have the responsibility of maintaining transmission system operation and a need for balancing the system Distribution System Opreators DSOs have the responsibility to serve the customers and for secure and reliable operation of the distribution system Balance Responsible Parties BRPs have an incentive to meet the forecasted consumption/generation Nordpool Elbas Elspot Bids and Contracts Contract BRP TSO Primary Reserve Secondary Reserve Manual Reserves Ancillary Services Where? What? Distributed Energy Resources DERs owned by end users can provide flexibility, but it has to be organised to overcome Many small contributions that have to be coordinated Investment costs for making units controllable Transaction costs Available flexibility Contract Consumer Consumer Consumer Non-Flexible Load Retailer1 Retailer2 Consumer Consumer Consumer Flexible Load Aggregator Contract? Aggregators AGGR can coordinate DER They can be the agents on the markets for flexibility 11 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

12 Use cases (I) 7 standard DSO services (ipower project) Proof-of-concept (DSO, aggregator, DER units) PowerCut planned PowerCut urgent PowerReserve PowerCap PowerMax VoltageSupport VArSupport 12 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

13 Market based services Product specifications bottom-up market development : Needs driven, competitive Low trade volume (at start) PoweCut Planned example Targeted DSO services: PowerCut Planned (load management) PowerCut Urgent Power Reserve PowerCap PowerMax VoltageSupport (voltage management) PoweMax example VArSupport TSO service: Fast Frequency Reserve BPR service: Portfolio Balancing 13 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

14 FLECH concept FLECH in existing market setup (consumption) 14 DTU Electrical Engineering, Technical University of Denmark Existing market FLECH integration 11 December 2016

15 FLECH concept Traditional decomposition 15 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

16 Request Bid Contract Activation Provision Payment FLECH concept Interaction between DSO,TSO or BRP and Aggregator DSO TSO BRP Planning Generate load profiles Estimate Grid load flow Derive flexibility demand Scheduling Update load schedule Operation Operate grid Settlement Metering FLECH Aggregator Forecast flexibility Aggregate & optimize flexibility Dispatch plans and reserv. Operate plans and activation Settle flexibility 16 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

17 FLECH service Specification DSO service example: PowerCut Planned (PCP) PowerCut Planned: Trading of this service comes naturally in two steps: A long-term reservation of capacity to ensure sufficient flexibility. A short-term activation scheme. First DSO service: A Capacity Reservation market where the DSO requested flexibility is reserved, and An Reserve Activation market where the activation part is handled. 17 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

FLECH service acquisition Example: Capacity Reservation market (PCP) 18 18

18 FLECH service acquisition Example: Capacity Reservation market (PCP) DTU Electrical Engineering, Technical University of Denmark 11 December 2016

19 FLECH service verification and settlement Example: Timeline of the PowerCut Planned markets Timeline Capacity Reservation market Clearing of Capacity Reservation market No Clearing Grid reinforcement Clearing Capacity Reservation Market Reserve Activation market #1 Reserve Activation market #2 Reserve Activation market #3 Reserve Activation market #N Reserve Activation period #1 Reserve Activation period #2 Settlement Reserve Activation period #N-1 Capacity Reservation Activation 19 Reserve Activation period #N Settlement 19 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

20 FLECH service verification and settlement How do we know the service was delivered? Primary Frequency Response PowerMax DSO service 20 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

21 FLECH service verification and settlement Generic Service Models are needed for Verification and Settlement: Tracking Service Band Service Cap Service Source: Bondy, Thavlov, Bundsgaard, Heussen. Performance Requirements Modeling and Assessment for Ancillary Services in view of Demand Response. submitted to: Transactions on Smart Grids 21 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

22 FLECH service verification and settlement Mapping of models and services Generic Service Model Tracking Service Band Service Cap Service Service Example Primary and Secondary Frequency Control Electric Vehicle Fleet Operator PowerCut PowerCap PowerMax 22 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

23 FLECH service verification and settlement Currently verification is done on an on/off basis: Remuneration = delivery(yes/no) * clearing price. Performance based remuneration will give incentive to good quality of service provision: Remuneration = performance * clearing price. Direct and statistical verification procedures must be investigated. Metering requirements must be adjusted DTU Electrical Engineering, Technical University of Denmark 11 December 2016

FLECH Aggregator DER (Customer) Contractual targets/requirements Consumers (Residentials): Primarily concern is access to reliable and affordable supply of electricity.

24 FLECH Aggregator DER (Customer) Contractual targets/requirements Consumers (Residentials): Primarily concern is access to reliable and affordable supply of electricity. Consumers (Industrial): Primarily concern is access to reliable and cost efficient electricity. Aggregators: Competitiveness by holding a portfolio of high capacity, low marginal cost resources and applying a strategic operational plan that optimizes the market value. FLECH: Standardised services with low transaction costs. FLECH DTU Electrical Engineering, Technical University of Denmark 11 December 2016

25 FLECH Aggregator DER (Customer) Contract and types Specification and enforcement of mutual commitments as agreed upon between the contracting parties require a clear contractual framework as documentation and evidence of the practical circumstances, responsibilities and liability. A flexibility contract concerns determination of the scope of services, a compensating mechanism and a range of other conditions regarding trigger events, advanced notification, frequency and duration of activation. A contract must provide sufficient incentive for both parties participation to be in accordance with the contracted conditions while maintaining individual rationality. Contract types Moral, Hazard: The consumer cannot perfectly observe and verify the actions of the aggregator. Adverse,Selection, I: The aggregator is far superior to the consumer in terms of access to and understanding of information that affects the potential value of the flexibility contracts. Averse, Selection, II: The aggregator s derived value from a contract depends on the scale, certainty, and operational agility of the contracted capacities and the consumer may have incentive to obstruct the delivery of the agreed flexibility DTU Electrical Engineering, Technical University of Denmark 11 December 2016

FLECH prototype status Targeted DSO services: PowerCut Planned

service: Portfolio Balancing Developed Implemented - ( )

Reserve & Portfolio Balancing Voltage control April 2014 at IBM

26 FLECH prototype status Targeted DSO services: PowerCut Planned PowerCap PowerMax TSO service: Fast Frequency Reserve BPR service: Portfolio Balancing Developed Implemented - ( ) Demonstrations: PowerCut Planned PowerMax Fast Frequency Reserve & Portfolio Balancing Voltage control April 2014 at IBM Lyngby. November 2014 at DTU Risø. November 2015 at Dansk Energi. May 2016 at DTU Risø Future application in the EcoGrid 2.0 project. 26 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

Aggregators (Insero+IBM) and University (DTU) Cloud service DSO Aggregators

27 FLECH Demo Setup in EcoGrid Bornholm New Market setup Collaboration between ICT developer (IBM), Aggregators (Insero+IBM) and University (DTU) Cloud service DSO Aggregators Bornholm Bornholm/ BEOF FLECH Insero Flexible Houses I IBM Flexible Houses II 27 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

28 Conclusion Unbundled electricity sector points at DSO level markets For markets to exist it is necessary to specify the products that will be traded With DERs delivering the services it is an added complexity ipower project was a research and innovation project with participation of universities and large industry and SMEs FLECH was developed as a solution for a standardized exchange between power system actors for requesting and delivering predefined services It was demonstrated as part of the project and is now being further developed with a new market setup. 28 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

29 Questions 29 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

30 Thank you Henrik Bindner Senior Scientist Energy Systems Operation and Management Center for Electric Power and Energy 30 DTU Electrical Engineering, Technical University of Denmark 11 December 2016

FLECH - a market place for DSO services. Event on Renewables Integration in Lund December 17 th, 2013 Lars Henrik Hansen

FLECH - a market place for DSO services Event on Renewables Integration in Lund December 17 th, 2013 Lars Henrik Hansen (larha@dongenergy.dk) Outline The ipower project The FLECH concept o Introduction