Early in September, we invited a number of our clients from around Europe to participate in a roundtable discussion on energy flexibility. First and foremost, it was an open exchange about the varied drivers for energy flexibility in different geographies, and how each operator is addressing the challenges they face. Key findings from the event are that while drivers for flexibility differ from country to country and across the energy sector, there are some common areas for operators to address together.
Regional drivers
Among the regional flexibility drivers shared at the roundtable were:
- The large-scale roll out of offshore wind energy in Denmark1 is driving the need for flexibility, which in the longer term, also applies to The Netherlands at the transmission level. This activity will also impact the need for congestion management.2
- The Baltic States have a limited need for flexibility due to their existing connections with Russian electricity sources, but the drive to end that dependence and join the European Transmission System Operator (TSO) networks requires these countries to prepare now.3
- In countries such as The Netherlands, high-volume local production and consumption are driving the need for low-voltage flexibility in networks that have relatively low volume. Low-voltage flexibility also should help alleviate congestion. In some cases, available flexibility in the market can be monetized now to prepare and secure financing for larger changes to come.4
- In the UK, energy flexibility is viewed in the context of a commitment to generate 70% of electricity from low-carbon sources by 2030 to help meet net zero emissions targets by 2050.5 Here, flexibility is a question of economics, market mechanisms and the infrastructure that enables the markets to operate effectively.
Regional approaches
Any plan for how to move forward with flexibility needs to take into account the drivers, needs and capabilities of each situation. A one-size-fits-all approach will not work. At the Energy Flexibility Roundtable, each geography presented on how they are addressing the various aspects and challenges of their specific situation in different ways, for example:
- GOPACS in The Netherlands is an initiative to mitigate congestion in the grid through collaboration with the open flex market. It brings together supply and demand, including the constraints of the network operators’ local situation.
- IO.ENERGY in Belgium is a platform led by Elia, Belgium’s TSO, which allows the market to develop innovative services using real-time metering data. These innovations range from data platforms validating different measurement methods to consumer applications assessing how to engage in flexibility.
- INTERRFACE is a cross-border collaborative EU H2020 program to develop a pan-European Grid Services Architecture (IEGSA) to act as the interface between the power system (TSO and DSO) and customers, and allow the seamless and coordinated operation of all stakeholders to use and procure common services.
Common issues for collaborative action
Each of these initiatives offered valuable insights, best practices and approaches to address key aspects of flexibility for the participants on the roundtable. The event also highlighted a number of fundamental aspects that need to be addressed, including:
- Regulatory reform: Regulatory and governance frameworks should be readied now to support future needs. Changes to regulations and laws can take considerable time, resulting in significant delays in enabling the market. As an example, countries that still have a fixed- or capacity-based grid fee should consider changes to allow for variable, time-of-use-based tariffs.
- Incentives: Clear strategies should be agreed and aligned with regulatory frameworks for how to provide the right incentives to all market participants. Current energy pricing has little headroom to incentivize consumers to engage in flexibility. The electricity price is relatively low and, for a large part, represents taxes. Additionally, net metering does not allow consumers to monetize their surplus production. Providing a consistent incentives strategy to the market will enable that same market to develop the right products.
- Collaboration: Collaboration across all market parties, including new entrants, is vital to ensure that a fair and effective value chain emerges. For example, TSO-DSO cooperation is vital around congestion management, regulatory guidance and market interaction. The report on An Integrated Approach to Active System Management by several European associations is a clear example of how this cooperation can support the market.
The roundtable participants concluded that the utilities industry in Europe should continue the conversation started about several common topics, including:
- Different ways to engage with market parties at different network levels
- Leveraging initiatives across borders
- Strategies for scaling up initiatives to full market implementations
We thank our roundtable participants and look forward to a continuing dialog about these topics. If you are interested in learning more about the roundtable, please contact me.
Read more about energy flexibility
Mattijs van de Hoed, Vice-President Consulting Services and central markets expert in the utilities industry, has published a series of blogs about energy flexibility and data exchange:
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Are central markets the answer to commoditizing energy flexibility?
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Next-gen, real-time data exchanges will power the energy industry
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Delivering on the benefits of data: How utilities can get the first-mover advantage
Also see the interview with Mattijs by Smart Energy International about “Digitalization: supporting central energy markets in transition.”
Read more about the regional drivers
- Danish Energy Agency report: Danish Experiences from Offshore Wind Development
- ScienceDirect.com: Congestion Management, from Renewable Energy Integration, 2014
- GlobalSecurityReview.com: Poland and Baltic States Reduce Reliance on Russian Energy
- PVTech.org: Netherlands to restrict grid linking requests to alleviate congestion
- Gov.uk: Offshore wind energy revolution to provide a third of all UK electricity by 2030
About this author
Mattijs van den Hoed
Vice-President, Consulting Services, CGI Netherlands
Mattijs van den Hoed leads the development of CGI’s Central Market Solutions (CMS) and is the product manager of the CMS solution suite. Mattijs has been with CGI for over 20 years; the last 10 of which he has spent leading central market implementations across ...
