With currently less than 4% of available demand utilized to provide demand side response in Europe, Europe’s transmission system operators (TSOs), through their regional association ENTSO-E, have identified what they regards as five critical challenges they believe need to be addressed to ramp up the uptake to enable 2030 and 2050 EU policy goals to be met.
TSO and DSO roles and responsibilities
In a new policy paper from ENTSO-E, the limited progress in deploying demand side response in Europe is attributed to contrasting views on its use and development, especially between the TSOs and the distribution system operators (DSOs).
TSOs will primarily need demand side response for system balancing, while DSOs will primarily need it for local congestion management.
A clear setting is needed of the roles and responsibilities of relevant parties to facilitate and enable the delivery of demand side response and customer engagement. In particular, this requires collaboration between TSOs and DSOs.
Efficient data handling procedures
Efficient arrangements for data handling will play a central role in the successful development of demand side response across Europe. For example, without efficient data handling, it will be difficult for customers to switch their demand side response provider, which could lead to reduced growth and limiting new business models.
A framework for data handling across multiple parties is crucial to ensure that TSOs, DSOs, suppliers and other market participants are able to gather the data required to fulfil licence, regulatory and commercial obligations.
Ensuring security of supply with demand side response
Traditionally, the planning and operation of networks have not included the full potential of demand side response. Load has been widely used as a last resort in emergency situations, and requirements to secure the system have been met so far by synchronous generation which has dominated the generation mix. However, the increasing penetration of dispersed and intermittent generation requires more control resources to maintain security standards.
There needs to be agreement in Europe on security of supply needs from the networks and the development of network planning and operation standards to reflect a new network paradigm with demand side response. This will entail defining and ensuring performance criteria for demand side response.
To facilitate the participation of demand side response, a change in the organization of electricity markets is needed. There is less market liquidity and less competition without demand side response participation, resulting in less effective electricity markets and increased costs for society.
Demand side response will need to be integrated as another market participant on equitable and transparent terms with generation and storage. This will require opening all markets to demand side response on a non-discriminatory basis and creating generic “demand side response friendly” products to allow markets to deliver appropriate price signals and incentives.
Consistent rules at EU level
It is currently difficult for consumers to provide demand side response and to participate in the energy market, as customers are not recognized as being central. Today, demand side response in the energy market is a small proportion of industrial load demand with virtually no residential or commercial load demand.
There needs to be adoption of a common European framework for demand side response with regional/national settings. These should set up clear and consistent ground-rules and roles for all relevant parties to deliver demand side response, while leaving flexibility for pilot projects at regional or national levels.