Digitalisation is facilitating a transformation of the electricity sector from a centralised system of large fossil fuel and nuclear power plants to a ‘bottom-up’ distributed network of renewable sources where the consumer will take a more active role in providing flexibility. As well as testing technical feasibility, the consortium of 12 international companies aims to answer some key questions that system operators must resolve to implement such a system.
The demonstration sites in Germany, Switzerland and Cyprus involve over 400 prosumers from the industry, building and transport sector. They can use the GOFLEX platform to offer demand response services to the system operator either by cutting demand or offering power supply at short notice.
Key performance indicators that will be measured during a six-month demonstration phase starting at the end of April include how much peak demand is lowered, how much flexibility is engaged, and the economic impact. Some initial findings from early trials and an updated mission statement will be published after the end of the month, says Zoran Marinšek of Slovenian manufacturing consultancy INEA, which is acting as the technical lead for the consortium. It is supported by IBM Ireland as coordinator and major solution provider and German consultancy BAUM as implementation manager.
One important distinction of this model from the existing energy balancing system is that congestion management in the distribution grid will be the responsibility of the Distribution System Operator (DSO), rather than the TSO. This allows flexibility to be applied locally, close to where the bottleneck on the grid occurs, reducing transfer paths.
This means a decision must be made for the future evolution of the grid, Marinšek says. Should it remain centrally organised or should it become a vertically nested structure, where each DSO is responsible for balancing its own cellular subsystem within the overall responsibility of the TSO?
“It could be shaped like a Russian doll, where each smaller unit takes care of its internal insides but is still part of the whole,” he says.
Valuing and remunerating flexibility services will also need to be re-evaluated if the project is to be commercialised successfully. The current system of grid tariffs is based on average cost over large areas, but the new system will only work effectively if dynamic prices reflect the value to the system operator and adequately compensate the flexibility provider. The value to the TSO is the avoided price of services stemming from the long-term and short-term marginal costs of running expensive peaking plants. The TSO will then pay the DSO, which will procure energy flexibilities on the local flexibility market from the prosumers.
One challenge that needs to be overcome is whether the price paid to the prosumer is high enough by itself to encourage a change in behaviour at the required time, as the actual price of electricity is often less than half of their bill. Here, the avoided costs of energy transfer on the grid due to smaller volumes of peak energy transfer and shorter paths from the place where it is supplied to the grid to the point of congestion or energy disbalance represent an important investment and operational cost and should be added to the cost of energy flexibilities. One method of grid capacity trading or payment needs to be introduced. Additionally, both explicit and implicit storage options provided by prosumers to system operators will augment the amount of flexibilities available on the market.
GOFLEX is a Horizon 2020 project co-funded by the European Commission (www.goflex-project.eu). The demonstration phase will end in October but is likely to be continued by some of the consortium members for another two years, Marinšek says.