Flexibility Beyond the hype A practical approach towards 2025 Martijn Duvoort, Head of Section Market & Policy Development 1 11 June 2016 SAFER, SMARTER, GREENER
Global trends in energy, and the role of flexibility 2
DNV GL s Technology Outlook 2025 10 Technology trends creating a new power reality 3
Energy transition strengthened by socio-economic developments Energy transition Growth of renewables Electrification of our energy supply Socio-economy Decentralisation, next to Europeanisation Digitization Super computers that fit in the palm of your hand Access to the cloud Open data Source: Eurostat Social media, social trends Socially connected everywhere, anytime 4
Projections show an increasing need for flexibility at multiple timescales Residual load Netherlands -2012 (0.7 GW PV, 2.5 GW wind) Residual load Netherlands -2030 (8 GW PV, 16 GW wind) 25000 25000 20000 20000 15000 15000 Megawatt 10000 5000 Megawatt 10000 5000 0 0-5000 0 1000 2000 3000 4000 5000 6000 7000 8000 Hour -5000 0 1000 2000 3000 4000 5000 6000 7000 8000 Hour Expected volatility at multiple timescales 5
Price incentives are to drive flexible technologies Fast controllable power generation (and/or curtailment of e.g. wind power) Demand response and an active participation of end-users Energy storage Increase interconnection capacity 6
Unlocking the value of flexibility 7
This flexibility is to be remunerated at ahead and balancing markets Wind uncertainty (RMS) Ahead markets Balancing provisions Month/week ahead Day ahead Hour ahead Day after OTC contracts Continuous forward market FRR reservation contracts Weekly FCR auction Day-ahead market Intraday Submission of E- programmes Gate closure Real-time Control signal/price Dispatch and (portfolio) balancing Imbalance price and settlement 8
Yet, today s market opportunities are dim with modest price volatility Ahead markets Balancing provisions 9
Flexibility is an heterogeneous product Energy consumers become flexibility providers, respond to market and regulatory incentives Physical constraints determining the boundaries of their product e.g. technology choice, amount and location Users of flexibility each have their own interests and needs BRP focuses on portfolio balancing within PTU (15 minutes) and within control area DSO needs power flow management and voltage control within specific area TSO is responsible for system balancing on time scales between 30 seconds and 15 minutes, and has to prevent congestion Source: USEF Aim is to design a standardised market solution for a heterogeneous product 10
Locality in dual-sided balancing markets STEP 1 STEP 2 STEP 3 At market clearing: determine locally available reserve power (map the locality of all supply bids): Each TSO/DSO may check the amount of locally available reserve power Market re-opened for TSO/DSO to place local R+ and R-bids upon need By introducing a 2-step clearing approach, TSOs and DSOs can ensure sufficient local reserve capacity, which comes at a cost 11
How is value created from flexibility? Cooling Systems Emergency Generators Prosumer Production Process Heat Pump Solar Electric Vehicle FLEXIBILITY Aggregator The aggregator A new role, unlocking flexibility Airco System - 12
How is value created from flexibility? Cooling Systems Emergency Generators BRP Flex for Portfolio optimization Prosumer Production Process Heat Pump Solar FLEXIBILITY Aggregator UFLEX DSO Flex For grid management Electric Vehicle Airco System TSO Flex to maintain balance - 13
Practical example: making money today 14
With commodity prices declining; parties are eager to explore alternative earning models B2B sees multiple pricing strategies; B2C products price kwh Retail innovation goes beyond commodity pricing Electric mobility opens a new window of opportunities Collaboration between utility and automotive sector is essential 15
EV market just started, however growing so fast that it can contribute to the present primary and secondary control reserve EVs will be able to serve the entire German demand by 2025 By that time stationary storage (2 nd use of EV batteries) will begin to take over the market 16
Annual alternative use benefits [Unit of Measure: EUR] Discharging capability always provides additional value 348 Larger batteries yield more economic potential 17
What about battery degradation? Negligible if managed The ideal charging and discharging strategy will be key to maximizing returns while preserving battery capacity 18
The case for second use Depending on the battery pack s fitness for reuse, the residual value is positive Second use batteries will compete against new stationary storage appliances 19
New collaboration leads to new business opportunities??? Present infrastructure accommodates various ownership and/or control concepts 20
Next steps 21
Business starts today Conceptual progress Today s business improvements New market designs are essential to boost flexible innovations Both wholesale and retail-level models have been developed We are ready to implement these concept both in live-pilots and real-gaming environments Already in today s markets, new flexible products are feasible DNV GL assists parties to end cave thinking and explore new product market combinations and partnerships (see EV case) DNV GL process and decision support services ensure agile response to opportunities 22
Thank you. Martijn Duvoort, Head of Section Market & Policy Development Martijn.duvoort@dnvgl.com +31 26 356 2598 www.dnvgl.com SAFER, SMARTER, GREENER 23