Jayson Dong Lucerne, 6 July 2017

Explicit Demand Response in Europe

Executive Members

Associate Members

SEDC Membership

160 GW Theoretical demand response potential in 2030

100 GW Theoretical demand response potential today

20GW Demand response activated today

Demand Response Potentials in Europe

Source: European Commission

Value for all markets

DailyEnergy

Efficiency

DailyTime-Of-

UseEnergy

(TOU Rates)

Dynamic Peak Load

Management(Dynamic

Rates)

ScheduledDemand

Response

Real-TimeDemand

Response(Ancillary Reserves)

Regulation(AncillaryServices)

Service LevelsOptimized

Time of UseOptimized

Service LevelsTemporarily Reduced

Increasing Levels of Granularity of ControlIncreasing Speed of Telemetry

Increasing Interactions with Grid (OpenADR & Smart Grid)

Resources Sold Back to Grid

• Wholesale • Hedging & capacity products • Balancing & ancillary services • Local congestion

management

Scope of the report

Regulatory framework for Explicit Demand Response across a wide range of markets • day-ahead, • intraday, • balancing, • capacity mechanisms

…covering 18 European countries!

Methodology Information gathering

• Expert interviews (TSOs, DSOs, retailers, aggregators, technology providers, consulting firms, research organisations) • Desk research • Review by national market participants the findings reflect the experience on the ground

Country assessment according to four key areas

1. Demand-side resources access to the markets 2. Service providers access to the markets 3. Programme requirements 4. Measurement and verification, payments, and penalties

1. Demand-side resources access to the markets

Credits: brincadeira89.wordpress.com

Demand-side resources access to the markets

This area assesses to what extent demand is allowed as a resource within the different national electricity markets (i.e. wholesale, balancing, ancillary services, capacity mechanism, etc.).

Demand-side resources access to Markets in Europe Opening of markets is progressing, but by far not completed.

• In FR, DE, and GB – Demand Response can participate in

almost all of the markets with a few exceptions • For instance, in DE and GB there are still some significant

barriers to participation in the wholesale market

• Capacity Mechanisms exist in FR, DE, and GB however there are still some major concerns regarding the full involvement of demand response

• In the Nordics, strategic reserves are prominent with fewer issues surrounding the participation of aggregated DR in countries in FI, SE, and NO.

2. Service Provider Access

Credits: Smashbrand

The role of aggregation

Service Providers access to the markets

This area assesses the ability of independent service providers (e.g. aggregators) to offer services to the consumer and access markets, without prior consent of the consumer’s retailer

Service Providers access to Markets in Europe Activity (almost) everywhere, but mostly not concluded

by closing of this report.

• FR has introduced detailed frameworks for independent Demand Response aggregators.

• BE, DE and the Nordics are in the process of discussing or establishing their own frameworks to enable independent aggregation.

• In GB the model allows independent aggregators direct access to consumers for most ancillary services and capacity products, but they are unable to utilise the energy for wholesale market purposes.

3. Viable Product Requirements

Credits: pinterest.com

Product requirements

This area refers to the requirements of the different products/programmes (e.g. minimum bid limit, symmetric bid, maximum number of activations, notification time, duration, etc.), assessing whether these enable demand-side resources to participate on equal footing with generation.

Product definition

Source: EnerNOC

Product requirements Progress has been made, but slowly.

• Generation-biased product requirements continue to

block demand-side resources. However, several changes into the right direction have been made.

• GB, DE, and FR have recognised the need to reduce

minimum bid sizes or to shorten balancing product durations.

• In FR Demand Response operators need to be certified only 1 year ahead of the delivery year.

• BMWi, launched a formal regulatory proceeding to stipulate the auction rules for balancing capacity in order to permit new, flexible providers to participate

• In GB, the main area of DR participation, the STOR

Product, requirements are still challenging for consumers.

4. Measuring output and Ensuring fair payment

Measurement, Verification, Payments, and Penalties

This area looks at the definition of baseline methodologies, possibility of using pools to meet the requirements (instead of individual assets), and looks at whether payments for providing demand-side flexibility are fair, transparent, and attractive.

Measurement, Verification, Payments, and Penalties Much more standardisation needed, in particular to unlock

commercial and residential DR potential.

• In GB, FR, and CH pooled loads can be prequalified as aggregate, while in DE, AT NO, and IE, individual units must still fulfil all requirements.

• In FR activation payments for the activation of Secondary control reserves is made at the generator’s obligation. Integration of DR is only possible through the secondary market, and with cooperation between generators and consumers.

• In DE, DSOs can block consumers from particpating in DR. While not all the products in the ancillary services provide availability payments.

4 key areas on which the progress was measured are: Demand Response Access to

Markets

Service Provider Access

Product Requirements

Measurement and Verification, Payments and Penalties

Mapping Demand Response in Europe

Explicit DR 2015

Explicit DR 2017

Explicit DR Map 2017 – Conclusions

1. The regulatory framework in Europe for Demand Response is progressing, but further regulatory improvements are needed

2. Restricted consumer access to Demand Response service providers remains a barrier to the effective functioning of the market

3. Significant progress has been made in opening balancing markets to demand-side resources

4. The wholesale market must be further opened to demand-side resources

5. Local System Services are not yet commercially tradeable in European countries

Appropriate price signals

• Allow real price signals (incl. scarcity prices, full cost of balancing)

• Reduce blunting effect of taxes, charges and levies • Right-size capacity (assessments), include demand-

side flexibility • Avoid perverse incentives (e.g. certain grid charges)

Credits: tachlistalk.com

Jayson Dong Policy Advisor

Rue d’Arlon 69-71, 1040 Brussels, Belgium

www.smartenergydemand.eu