Actors and Roles in Electricity Systems

Transcription

1 Actors and Roles in Electricity Systems Kristof De Vos KU Leuven EnergyVille SGF Smart Grid School October 13, Brussels

2 Lecture outline Part I Introduction to electricity sector liberalisation From vertically integrated utilities towards unbundling Part II Actors and roles in the electricity system of today Actors involved in the physical flow of electricity Actors involved in the purchase/sale of electricity Actors involved in balancing the electricity system Actors involved in regulation Part III New actors and roles in future electricity systems New services and business cases in smart grids context 2

3 Pre-liberalisation structure Vertical integrated utility Responsible for: Generation Networks (T&D) Retail Geographic monopoly De facto or legal Often state-owned 1 company Generation Transmission Distribution Retail 3

4 Liberalisation European liberalisation process since 1990s Towards a competitive internal energy market (IEM) Almost simultaneous for electricity and gas sector Competition and trade = welfare increasing cost-efficiency price reductions service improvements 3 legislative packages: 1 st Directive 96/92/EC and 98/30/EC 2 nd Directive 2003/54/EC and 2003/55/EC 3 rd Directive 2009/72/EC and 2009/73/EC 4

5 Liberalisation: 3 legislative packages 3 legislative packages 1 st Directive 96/92/EC and 98/30/EC 2 nd Directive 2003/54/EC and 2003/55/EC 3 rd Directive 2009/72/EC and 2009/73/EC set common rules for electricity sector: Consumers right to choose their supplier Unbundling TSO and DSO from production and supply Third party access transmission and distribution Independent national regulators 5

6 Liberalisation: unbundling GenCo GenCo GenCo Competition TransCo DistCo DistCo DistCo Regulated Monopolies Retailer Retailer Retailer Competition 6

7 Lecture outline Part I Introduction to electricity sector liberalisation From vertically integrated utilities to unbundling Part II Actors & roles in the electricity system of today Actors involved in the physical flow of electricity Actors involved in the purchase/sale of electricity Actors involved in balancing the electricity system Actors involved in regulation Part III New actors & roles in future electricity systems New services and business cases in smart grids 7

8 The physical flow of electricity Centralised generation Large-scale power plants Transmission Transformed to high voltage Reduce losses for long-distance transport Distribution Transform to low voltage Delivery to end-consumer Demand Residential, Industrial, Tertiary sector Note presence of: Large consumers connected to TS Small, distributed generation connected to DS Centralised Generation Transmission Distribution Demand 8

9 Centralised generation Majority electricity is generated by means of centralised generation Economies of scale: transport of fuel and efficiency increase Types: Base Load (high fixed cost, low variable cost, low flexibility) Thermal power plants with steam cycle Nuclear power plants Mid Load (average fixed and variable cost, average flexibility) Combined-Cycle Gas Turbine (CCGT) Peak load (low fixed cost, high variable cost, high flexibility) Open-Cycle Gas Turbines (OCGT) Gas and Diesel Engines Turbojets Centralised Generation Transmission Distribution Renewable Energy Sources (high fixed cost, low variable cost, low controllability) Large solar or wind farms (e.g. offshore) Demand Hydro power plants (low variable cost, high flexibility) 9

10 Centralised generation Conventional thermal power plant with steam cycle Typical fuel: coal But also waste and biomass Characteristics Average investment cost Low fuel cost Base load generation Future: Large available coal stocks High CO 2 emissions ( ETS) Carbon-Capture and Storage CCS) 10 10

11 Centralised generation Nuclear power plant Fuel: uranium Characteristics High investment cost Low fuel cost Base load generation Future: No CO 2 -emissions Security and waste Phase-out? 11

12 Centralised generation Combined-Cycle Gas Turbine Fuel: natural gas Characteristics Average investment cost High fuel cost Mid load generation Future: Low CO 2, high efficiency High flexibility Subject to price volatility 12

13 Centralised generation Hydro power plants No fuel cost Characteristics High investment cost Low variable cost Future Flexibility Geographical limitations Storage provider (infra) 13

14 Centralised generation Renewable Energy Sources Wind, PV, biomass, ocean Characteristics High investment cost No fuel cost (exc. biomass) Support mechanisms Future Output variability (not firm) Climate policy goals Often remote locations 14 14

15 Centralised generation Represented by the merit order: P Smoothed P Low Demand High Demand Low Demand High Demand Supply Curve OCGTs Smoothed Supply Curve BASE LOAD Nuclear Coal Hydro CCGTs MID LOAD PEAK LOAD Q RES Wind BASE LOAD MID LOAD PEAK LOAD K De Vos 2015 Q 15

16 Decentralised generation Centralised Generation Transmission No universal definition! Small-scale electricity generation Generation close to consumption Electrical generation unit connected to the distribution grid. Distribution Demand Decentralised Generation Main Technologies Wind power Photovoltaics Combined-Heat and Power Gas turbine Fuel cells 16

17 Electrical storage Centralised Generation Transmission Distribution Demand Storage Generation and demand technology Charge, store, discharge electricity Efficiency loss Centralised and decentralised Main Technologies Pumped hydro storage Batteries Power-2-Gas & Fuel Cell Supercaps, SMES and Flywheel Thermal 17

18 Generation mix in Belgium: adequacy issues 2014 Installed Capacity: 20.1 GW 2014 Import Capacity: 3.5 GW 2014 Peak Demand: 13.1 GW Nuclear Power Plants Phase Out Technical unavailability CCGTs Profitability issues Wind and PV Variable Hydraulic storage units ENTSO-E,

19 Role of the generator Generation of electricity Sell electricity in the wholesale market (infra) Balance positions (infra) Strong internationalisation!!! 19

20 Transmission Centralised Generation Transmission Distribution Demand Demand High voltage transport of electricity Upscale voltage generation facility (20 kv) Transport longer distances (loss reductions) International transport Not uniquely defined Belgium: kv The Netherlands: kv United Kingdom: kv Feeder for: Distribution grid Large industrial consumers (BASF, Total, Infrabel) 20

21 Role of the TSO Centralised Generation Transmission Distribution Demand Demand Grid exploitation and maintenance Monitoring of system conditions Ensure stable frequency level Ensure stable voltage levels Grid investments Ensure security of supply Accommodate generation Interconnections between control zones Market facilitation 21

22 Role of the TSO To keep the lights on 22

23 System state monitoring System-state estimation Determine best possible picture of real-time system conditions (power flows) Avoiding congestions and maintain system margins Based on metered values Find a best-fit detailed load flow Contingency analysis Determine risks for unexpected failures or outages Based on computer simulations N-1 security rule Redundancy: one accident cannot bring the system in danger 23

24 Frequency control Ensure stable frequency level (50 Hz) Balance generation and demand Generation > Demand Frequency Generation < Demand Frequency Stable frequency is a prerequisite for safe system operation 5 steps to tackle a frequency drop in continental Europe: Frequency (Hz) Actions 49.8 step 1 : activation of reserves in generation units 49 step 2 : % load shedding 48.7 step 3 : additional % load shedding 48.4 step 4 : additional % load shedding 47.5 step 5 : all generation units operate in island-mode Similar approach for frequency increase Belgian load shedding plan is determined by law 24

25 Frequency control Frequency Containment Reserves (FCR) Primary reserves Stabilize frequency within range around set point Fast, decentralized, automatic control: local detection Thermal power plants, but also demand Response time of seconds Continental Europe: 3000 MW Outage of the two largest power plants Allocated to countries according share consumption Belgium: ± 100 MW 25

26 Frequency control Automatic Frequency Restoration Reserve (afrr) Secondary reserves Restore Area Control Error (ACE) Deviation from scheduled exchanges Represents control zone s imbalance Fast, central, automatic control: TSO signal Flexible power plants Response time of minutes Belgium: ± 140 MW 26

27 Frequency control Manual Frequency Restoration Reserves (mfrr) Tertiary Reserves Free and assist afrr Slow, manual, central control: TSO signal Power plants, demand, storage, inter-tso Response time of minutes Belgium: 400 MW R3 Production 261 MW R3 Interruptible demand 250 MW inter-tso (not guaranteed) Complemented with Free Bids 27

28 Summary: frequency control 28

29 Increasing balancing requirements Variability of wind power and photovoltaics Inherent prediction errors (uncertainty) Forecast updates approaching real-time Geographical smoothing Impact on sizing and allocation of reserve capacity Increasing FRR requirement Decreasing share conventional power plants Increasing cost and need for new technology providers Observations in the Belgian power system Impact wind power forecast on system imbalance Impact system imbalance on imbalance price (negative prices) Trend towards procurement from new technology providers 29

30 Strategic reserves in Belgium Capacity Remuneration Mechanism (CRM) Ensure generation adequacy (security of supply) Ability to meet peak demand Not related to operating reserve capacity!!! Unexpected outages Demand and renewable generation variability Belgian strategic reserve capacity Winter: : 850 MW (incl. 100 MW demand) Winter: : Additional 2750 MW (incl. demand) Activated in case of market shortage Avoid load shedding 30

31 Voltage control Ensure stable voltage levels Comparison with frequency control Voltage ~ Reactive power Frequency ~ Active power Voltage = local parameter Frequency = global parameter General principles Locate reactive power generation nearby consumption Avoid large reactive power transmission to free active power transmission Controllable reactive power sources Generating units Capacitor banks, Static VAR Compensators (SVCs), Static Synchronous Compensators (STATCOMs) 31

32 Voltage control Voltage levels in Belgium: Majority overhead Overhead for HV Lower insulation Higher visual pollution Underground for LV Less insulation needed Other common voltage levels in Europe, e.g.: 275 and 132 kv in UK 330 kv in Baltic area and Russia 750 kv installed in Hungary, Poland, Romania, Bulgaria (linked to Russia), but limited (or even not in) service Note: Extra high voltages for AC networks (>1000 kv) being developed in e.g. India 32

33 Grid investments 1 Why? Security of supply Accommodate generation Market facilitation Procedure? Identification, proposal by TSO and approval NRA Permitting, financing, construction phase current max. commercial import capacity: MW (FR and NL) not yet connected to Germany & UK (ALEGrO and NEMO) 33

34 Interconnections Investments in interconnections (partnerships) Identification and proposal by TSOs approval NRA European objectives and priorities TEN-E programme ENTSO-E ten year development plans Operation of interconnections: capacity allocation TSO determines capacity available for cross-border market transactions. Bottlenecks when insufficient capacity is available to support all desired market transactions 34

35 European transmission grid Several synchronous zones Independent frequency level Continental Europe (Source: ENTSO-E) Often linked with subsea HVDC Towards European grid-overlay SUPERGRID Bulk transport of energy Connecting renewable energy Solar power (south) Wind power (central) Hydro power (north) 35

36 International coordination: ENTSO-E Europe-wide planning and operations roles By European legislation (3rd Energy package) Promote completion and functioning of the internal market in electricity and cross-border trade Ensure optimal management, coordinated operation and sound technical evolution Activities: Ten year development plans (TYNDP) Drafting of network codes Common information exchange model 36

37 Role of the TSO High voltage transport of electricity Grid investments and security of supply Market facilitation Internationalisation!!! 37 37

38 Distribution Centralised Generation Transmission Distribution Demand Decentralised Generation Low voltage transport of electricity Downscale voltage transmission grid Local distribution Not uniquely defined Belgium: up to 70 kv Italy: up to 132 kv France: up to 20 kv Feed-in DS-connected demand Residential, Industrial and Tertiary sector 38

39 Roles of the DSO Centralised Generation Transmission Distribution Demand Decentralised Generation Operation, maintenance & development of distribution grid Construction & daily operation of distribution grid Install new grid connections, adapt existing grid connections, install electricity meters Solve problems & breakdowns in the distribution grid Read electricity meters & manage consumption data Public service obligations e.g. promote rational use of energy, social supply, street lighting 39

40 DSOs in Europe Huge diversity among Member States Voltage levels Italy: up to 132 kv France: up to 20 kv Public-private partnership Purely public (Belgium) versus full privatization (UK) Public-private partnership Scope of activities Operation Public service obligation (e.g. social services, public lighting) Meter ownership and operation Number and size 1 (Slovenia) versus many (Germany > 800 DSOs) 40

41 Role of the DSO Low voltage transport of electricity Public service obligation Market facilitation 41

42 Demand Centralised Generation Transmission Distribution Demand Decentralised Generation Sector Residential, Industrial, Tertiary sector Voltage level Transmission (railways, BASF) Distribution (households, SMEs) Metering Manual Automatic Advanced 42

43 Evolution of the demand Evolution towards Prosumers and Prostumers Through new technology Smart Metering Electric Vehicles Home Automation Allowing for active consumption management Linear,

44 To summarize: actors involved in physical flow of electricity Centralised Generation Transmission Distribution Demand Decentralised Generation Generators Centralised generator connected to transmission grid Decentralised generator connected to distribution grid Transmission System Operator Responsible for high-voltage transmission of electricity Distribution System Operator Responsible for low voltage distribution of electricity Consumers Connected to distribution grid Connected to transmission grid 44

45 Lecture outline Part I Introduction to electricity sector liberalisation From vertically integrated utilities to unbundling Part II Actors & roles in the electricity system of today Actors involved in the physical flow of electricity Actors involved in the purchase/sale of electricity Actors involved in balancing the electricity system Actors involved in regulation Part III Actors and roles in future electricity systems New services and business cases in smart grids 45

46 Electricity market Household Household Household Company Retailer Retail market Trader Wholesale market Company Generator 46 46

47 VOLUME [MWh] Wholesale market simplified viewpoint generator Unexpected outage: open position close to delivery Season or month contract Close-to-delivery contracts SHORT LONG Installed capacity Available capacity Multi-year or year contract TIME [Hour] 47

48 VOLUME [MWh] Wholesale market simplified viewpoint consumer Typical winter week Typical hourly variations close to delivery Hourly contracts SHORT LONG Season or month contract Typical summer week Multi-year or year contract TIME [hour] 48

49 Wholesale market Bilateral trading (OTC-market) Auctions (Power Exchange) Products Characteristics OTC Bilateral Not anonymous Customised & standard products PX Multilateral Anonymous Standard products Clearing & settlement Taking over counterparty risk Long term Forwards Futures Short term Spot OTC contracts DA & ID trade 49

50 Power exchange When it is difficult to find a counter part Centralised trade in an auction When you do not want your competitor to know if you are short or long Anonymous trade with power exchange as counter part When it is about fine tuning rather than customising trade Standardized hourly contracts European electricity markets: Majority trade by means of bilateral contracts Trend: long-term markets (OTC) and short-term (PX) PX improves market liquidity and reduces risk 50

51 Power Exchange (Day-Ahead Trading) Introduction orders Price Demand Supply exchange opens closes Volume Traded Volume publication results Time 51

52 Day-Ahead Market: example Daily report for Market Closure 12h D-1 Results Published around 13h 52

53 Power exchanges in Europe Starting from national power exchanges Integration process: Concentration APX: NL NL, BE, UK EPEX: EPEX FR, DE, AU, CH Cooperation Europex Products Day-ahead market Intra-day market Derivatives: futures Facilitate OTC-trading 53 53

54 Regional market integration TSO as market facilitator Inside a bidding zone: copper-plate approach Between bidding zones: capacity allocation Calculation available capacity: NTC versus Flow-Based Allocation electricity market: forward, day-ahead, intra-day Auction Explicit: long-term markets Implicit: short-term markets Multi-Regional Market coupling Regional process and further evolution Feb 4, 2014: North-Western Europe (GB + Scandinavia) : Spain, Portugal and Italy, Slovenia Identical prices, except when congestion 54

55 SUMMARY: European Target Model Source: Elia 55

56 Transmission tariffs Two regulated remuneration mechanisms Cost-based: validated costs & reasonable profit Incentive based: revenue-cap or price-cap Three main revenue streams Transmission tariffs Grid connection charges Congestion rents Long term tariff certainty needed for grid investment! 56

57 Retailer (supplier) Grid connection and access contract DSO, TSO Supply of energy to end-consumers Buy electricity on wholesale market Bilateral (consumer) or market platform Charge electricity tariffs Energy service, network tariffs, taxes Fixed versus variable tariffs (day/night) Balance portfolio or assign BRP Estimate demand Offer energy services e.g. invoicing, information, customer services, social obligations 57

58 DSO as market facilitator Access register EAN Identification Supplier and BRP Metering data Information exchange Via Central Clearing House Information with respect to Involved parties Connection & meter Consumption, injection and/or generation Processes (e.g. drop, switch move) 58

59 DSO as market facilitator Energy allocation & reconciliation Determine energy sales supplier Periodic Allocation (monthly) Based on Real Load Profiles (RLP) for consumers with AMR Based on Synthetic Load Profiles (SLP) for consumers with MMR Residential consumers with analogue meters Error when compared to yearly metering data Reconciliation rectification between suppliers and BRPs Based on real meter readings Correction on allocated volumes 59

60 Distribution tariffs Connection charges Shallow connection charges Deep connection charges System usage Energy-based tariffs Capacity-based tariffs Regulatory charges Renewable energy fees Taxes 60

61 Components Belgian electricity bill Creg

62 To summarize actors involved in the sale of electricity Wholesale market participant Generators, suppliers, large consumers or traders Purchases/sells electricity bilaterally (OTC) or via PX Market organiser (PX Power Exchange) Offers facilities (online trading platform anonymous trade) Offers trading and services (credit risk managed by PX) Retailer Purchases electricity directly from generators or via PX Sells electricity to end-consumers TSO and DSO Facilitating the market 62

63 Lecture outline Part I Introduction to electricity sector liberalisation From vertically integrated utilities to unbundling Part II Actors & roles in the electricity system of today Actors involved in the physical flow of electricity Actors involved in the purchase/sale of electricity Actors involved in balancing the electricity system Actors involved in regulation Part III Actors & Roles in future electricity systems New services and business cases in smart grids 63

64 Power system balancing: what & why? Electricity non-storable economically on large scale Imbalances result in frequency deviations Pgeneration < Pload Pgeneration > Pload f f Large deviations result in protective disconnection of generation units & loads, and eventually system blackout P load = P generation Interconnected system: each TSO responsible for balancing its own control area 64

65 TSO versus BRP balancing responsibilities Synchronous system P generation = P load BRP (per settlement period) P generation + P import + P purchases = P load + P export + P sales I/E ~ BRP 1 Injection ~ Off-take ~ BRP N I/E Import/Export Control area P generation + P import = P load + P export 65

66 Balancing market PROCUREMENT SETTLEMENT BSP CAPACITY PAYMENT ( /MW) Longer term (day/month/year/...) BSP TSO BSP Per settlement period ENERGY PAYMENT ( /MWh) 66

67 Balancing market PROCUREMENT SETTLEMENT BRP TSO BRP BRP 67

68 BRP balancing process: e.g. generator FORWARD markets DA market ID market nominations Day (D-1) Day (D) ID GC Time DA GC final GC Sales (MWh) SP1 SP2 SP3 SP4 Settlement periods Sales (MWh) SP1 SP2 SP3 SP4 Settlement periods Sales (MWh) SP = 15 min Belgium, 30 min France, 60 min Nordic SP1 SP2 SP3 SP4 Settlement periods Sales (MWh) SP1 SP2 SP3 SP4 Settlement periods 68

69 BRP balancing process: e.g. generator Nominations Real-time measurements Positive imbalance (LONG position) + Sales (MWh) SP1 SP2 SP3 SP4 Settlement periods Generation (MWh) SP1 SP2 SP3 SP4 Settlement periods SP2 Negative imbalance (SHORT position) Nominated off-takes Measured injections - SP2 69

70 Settlement 1-price system NEGATIVE (short) System imbalance POSITIVE (long) Imbalance BRP NEGATIVE (short) + P RT up + P RT down POSITIVE (long) - P RT up - P RT down 1-price system and penalty NEGATIVE (short) High system imbalance POSITIVE (long) Imbalance BRP NEGATIVE (short) + P RT up *(1 + penalty up) + P RT down POSITIVE (long) - P RT up - P RT down *(1 - penalty up) 70

71 SHORTAGE BRP EXCESS Activation Price Summary: balancing market -Imbalance SYSTEM R3 FREE BIDS R2 IGCC IGCC R2 FREE BIDS R3 Available reserve capacity TSO EXCESS MDP TSO pays BRP MDP BRP pays TSO SHORTAGE MIP TSO pays BRP MIP BRP pays TSO A positive upward activation price and negative downward activation price is translated into a positive settlement tariff (MIP and MDP). In case of a positive downward activation price, the settlement tariff is negative and money flows are reversed. System operator contracts upward capacity Remuneration for their increased fuel costs Merit order based on fuel cost and flexibility 71

72 SHORTAGE BRP EXCESS Activation Price Summary: balancing market -Imbalance R3 FREE BIDS R2 IGCC IGCC R2 FREE BIDS R3 Available reserve capacity TSO EXCESS MDP TSO pays BRP MDP BRP pays TSO SYSTEM SHORTAGE MIP TSO pays BRP MIP BRP pays TSO System operator contracts upward capacity Remuneration for their increased fuel costs Merit order based on fuel cost and flexibility System operator contracts downward capacity Remunerate TSO for reduced fuel costs Merit order based on fuel cost and flexibility Positive price bids of less flexible power plants or renewables A positive upward activation price and negative downward activation price is translated into a positive settlement tariff (MIP and MDP). In case of a positive downward activation price, the settlement tariff is negative and money flows are reversed. 72

73 SHORTAGE BRP EXCESS Activation Price Summary: balancing market -Imbalance R3 FREE BIDS R2 IGCC IGCC R2 FREE BIDS R3 Available reserve capacity TSO EXCESS MDP TSO pays BRP MDP BRP pays TSO SYSTEM SHORTAGE MIP TSO pays BRP MIP BRP pays TSO A positive upward activation price and negative downward activation price is translated into a positive settlement tariff (MIP and MDP). In case of a positive downward activation price, the settlement tariff is negative and money flows are reversed. Large postive imbalance (unexpected excess) Activation price determines negative market price Excess: pay for injecting Shortage: paid for offtake Reinforced by penalties in the market 73

74 Example: Belgium system imbalance 74

75 Summary Actors involved in balancing the power system TSO Transmission System Operator Responsible for balance in its control area BRP Balancing Responsible Party Generators, suppliers, large consumers or traders Responsible for balance in their portfolio Passes on day-ahead and intra-day nominations to the TSO Pays imbalances charges to the TSO BSP Balancing Service Provider Mostly generators, but can also be consumers Delivers balancing services to the TSO Receives a remuneration from the TSO 75

76 Lecture outline Part I Introduction to electricity sector liberalisation From vertically integrated utilities to unbundling Part II Actors & roles in the electricity system of today Actors involved in the physical flow of electricity Actors involved in the purchase/sale of electricity Actors involved in balancing the electricity system Actors involved in regulation Part III Actors & roles in future electricity systems New services and business cases in smart grids 76

77 Why regulation? 4 types of market failures Markets fail in the presence of natural monopolies Regulation of transmission & distribution grids Markets fail in the presence of dominant players Regulation of energy markets Markets fail to provide public services Public service obligations Markets fail in the presence of environmental externalities Regulation of green house gas emissions Renewable energy support mechanisms 77

78 Roles of the regulators European, national and regional legislation National regulatory authorities (NRAs) Part of 3 rd legislative package Also regional regulatory authorities possible Advises government towards organization and functioning of the electricity market Controls compliance with rules and legislation Monitor compliance with unbundling and liberalisation Appoint DSOs and TSOs Approve network tariffs Approve defence plan (black-out) 78

79 European Energy Regulators Council of European Energy Regulators (CEER) March 2000, HQ Brussels Facilitate EU internal market for electricity and gas Cooperation, information exchange & assistance between national regulators Agency for Cooperation among Energy Regulators (ACER) 3 March 2011, HQ Ljubljana, Slovenia Integration EU market electricity and gas Framework Guidelines Network Codes Decisions access and operation cross-border investments Advise to European institutions 79

80 Belgian Energy Regulators Federal level (CREG) Transmission (> 70 kv) Conventional and Nuclear power plants Offshore generation Transmission tariffs and electricity prices Regional level (VREG, CWAPE, BRUGEL) Distribution ( < 70 kv) Renewable and distributed generation Distribution tariffs Supplier licenses Energy efficiency 80

81 Lecture outline Part I Introduction to electricity sector liberalisation From vertically integrated utilities to unbundling Part II Actors & roles in the electricity system of today Actors involved in the physical flow of electricity Actors involved in the purchase/sale of electricity Actors involved in balancing the electricity system Actors involved in regulation Part III Actors and roles in future electricity systems New services in smart electricity grids 81

82 Changing context (1) 1. Integration of Renewable Energy Sources (RES) Variability: limited controllability and predictability (wind and PV) Replacing conventional controllable generation (e.g. CCGT) Need for new sources of flexibility backing RES 82

83 Changing context (2) 2. Integration of Distributed Energy Resources (DER): Distributed and Renewable Generation (DG) PV, wind, biomass, CHP, back-up generating units prosumers Examples of local generation exceeding consumption (cfr. Germany) Distributed Storage (DS) R&D efforts still needed to improve technology Expectations to reduce future cost of small-scale, local energy storage Electric Vehicles (EV) and other appliances (e.g. heat pumps) Increase electricity consumption (energy and peak) Flexible smart charging and Grid Services V2G Demand Response (DR) Initially for large consumers Increasing potential towards small-scale residential consumers (e.g. heat pumps) 83

84 Changing context (3) Evolution towards Smart Distribution Grids (SG): Roll-out smart metering systems Infrastructure for active consumer participation: measure and control Improved grid monitoring and control: towards and active management of distribution systems 84

85 New services in the electricity market: flexibility Active integration of DER: generation, storage, demand Control injection and off-take towards system needs Manual or automatic control Incentive-based or price-based Different services, for example: BRP optimized portfolio management TSO provide alternative source of reserve capacity DSO avoid expected and unexpected congestions 85

86 Price-based demand response Time of Use Pricing (e.g. peak versus off-peak) Dynamic Pricing (e.g. system conditions) Manual versus automatic 86

87 Smart metering infrastructure Facilitator for price-based schemes BUT not a prerequisite Price signals by means of bidirectional communication Home energy management system Controllable application Periodical measuring off-take and injections Consumers response Home energy management system and application 87

88 Incentive-based demand response Service based Capacity remuneration (availability) Activation remuneration (energy) 88

89 Markets for Flexibility Flexibility Users TSO BRP New services DSO Global Market? Local Market Flexibility Providers Large Scale FLEXIBILITY New actors DR DS DG 89

90 Who will take up these new roles? Existing market actors? E.g. the DSO could take up Regulated and non-regulated data management Request management Network connectivity E.g. the supplier could take up Non-regulated data management Request management Energy services Home energy control 90

91 Who will take up these new roles? Or new actors entering the value network? Aggregator Virtual power plant (VPP) Energy Service Company (ESCO) Clearing House 91

92 Aggregator Role: Gathers ( aggregates ) the flexibility of consumers and producers to build Active-Demand (AD) services Mediator between consumers and generators, markets & other power system actors Offers the AD-services to the power system participants via the markets Manages the risks associated with uncertainties in the markets and responsiveness of the consumer base: price and volume risk Belgium Actility, Anode, EnergyPool, Restore 92

93 Virtual Power Plant (VPP) Role: Infrastructure to operate DER to work as a conventional power plant Mechanism to allow active market participation Energy markets Ancillary services Interlinked by means of ICT Not necessarily geographically concentrated! 93

94 Energy Service Company (ESCO) Role Selling energy services to consumers Energy cost reduction measures Example: energy cost reduction in a hospital Light savings, co-generation, demand response Study, deployment and maintenance of equipment Paid back by energy cost savings Alternative model: Sharing of the realized benefits 94

95 Clearing House Role coordination and facilitation of information exchanges between different actors in the energy market Example Belgium Atrias initiative = cooperation of the 5 largest DSOs Mission: Develop a new market model and realize improved market processes Building of a clearing house application supporting these processes in an IT-efficient manner 95

96 Further questions Now, the challenge is to avoid the following scenario 96