With the growth of distributed generation such as rooftop solar, energy storage and electric vehicles, flexibility is becoming both more critical in need and more complex to deliver. No longer is it only the preserve of large utilities utilising central power plants. It is involving growing numbers of smaller end users, providers and requesters, indicating the requirement for a platform capable of managing the processes, including trade, dispatch and settlement, of such flexibility.
Various platforms have been developed with varying objectives, e.g. as a market place, market facilitation, virtual power plant, transmission and distribution system operator (TSO-DSO) coordination, etc. However, so far there is no standardisation and this is the focus of a new white paper from USEF Foundation.
USEF defines flexibility as “the ability to purposely deviate from a planned/normal generation or consumption pattern”, with deployment either directly by an external signal, or indirectly as a response to a financial incentive such as energy prices and tariffs. Its value arises and is determined only when it is applied in a specific product such as for balancing, congestion or capacity management.
USEF is focussed on developing standards for an integrated smart energy market for Europe, namely the Universal Smart Energy Framework (USEF), which has included a focus on aggregator models as key for flexibility delivery.
Market platforms for flexibility
USEF envisions multiple market platforms being developed and operated by third parties and providing the gateway to ancillary services. While the system operators could host such services on their own operational platforms, through the market platforms they would have access to a larger and more diverse pool of flexibility providers.
Potential benefits of such an approach include lower transaction costs as flexibility markets are concentrated and well organised, higher liquidity as flexibility is not fragmented over many smaller flexibility platforms, and higher transparency as prices for TSO and DSO products are transparent and may attract new flexibility service providers and stimulate investment to unlock further flexibility.
However, the TSOs and DSOs would still need to implement functionality that cannot be provided by a commercial platform. These include TSO-DSO coordination, verification and settlement of product delivery (physical settlement), ex ante information exchange on forecasts, nominations and baselines, tendering of availability contracts and prequalification.
USEF identifies three what it calls “exemplary initiatives”, as examples of flexibility market platforms currently under development in Europe.
These are the EPEX SPOT local flexibility market, an open and voluntary market-based congestion management platform, which is being pioneered by the enera partner network in northwest Germany; the Electricity Trading Platform Amsterdam (ETPA) also for congestion management, which is being pioneered by the Dutch DSO-TSO initiative IDCONS; and the NODES initiative being implemented by Norway’s Agder Energi for peak load management.
According to USEF, these initiatives are conceptually very similar in terms of functionality and aim to reach similar benefits for both buyers and sellers of flexibility, with the main differentiator appearing to pertain to intraday trading. However, further convergence is expected with their development.
Standardised platform-services interactions
USEF indicates that in order to allow a level playing field for market platforms facilitating grid management services, and to allow all TSOs and DSOs to make use of these developments, the interaction between the flexibility market platforms and grid management services needs to be standardised.
TSOs and DSOs should not limit their interaction to only one market operator (unless there is no competition). They need to approach market operators in a non-discriminatory manner and cannot allow themselves to be locked-in to a particular operator.
From the market operators’ perspective, every TSO and DSO is a potential customer of their platform. Since most market operators have a strong international focus, potentially thousands of system operators may interact with the market platform. A standardised interface would reduce the costs, while the competitive edge should be created using other elements such as the portfolio of flexibility providers active on the platform or intelligent matching algorithms.
For these standardisation efforts, three ingredients are necessary as a minimum, according to USEF. These are a clear understanding of ancillary services processes and characteristics and of electricity/flexibility markets, a clear framework for settlement and information exchange, and understanding of local specificities, ensuring the interface is sufficiently flexible to support local differences.
USEF says its current framework provides a solid basis for this standardisation effort but requires further collaboration to achieve full support from all the major stakeholders at the European level.