2013 energy sector program phase-2 project - epg) projesi · example: “consumerhas the right and...

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2013 ENERGY SECTOR PROGRAM PHASE-2 PROJECT

EU IPA13/CS-02.a

Energy Market Development

Seminar 4 – Task 1.E – Demand Side Participation in selected EU Markets

18.10.2019, Ankara

Guido Cervigni

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Agenda

Part 1: Introduction

1. EU legislation

2. Demand Side Response

3. Rationale for supporting DSR

Part 2: Integration of DSR in the market: design and implementation requirements

4. Integration in Day-ahead / Intra-day markets

5. Integration in Ancillary service /Balancing market

6. Integration in Capacity remuneration systems

7. DSR in the Turkish market

Part 3: International experience

8. Europe

9. United States

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Agenda


1. EU legislation









8. Europe

9. United States

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EU legislation

Regulation (EU) 2019/943

Whereas …(7) In the past, electricity customers were purely passive, often buying electricity at regulated prices which had no direct relation to the market. In the future, customers need to be enabled to fully participate in the market on equal footing with other market participants and need to be empowered to manage their energy consumption. To integrate the growing share of renewable energy, the future electricity system should make use of all available sources of flexibility, particularly demand side solutions and energy storage, and should make use of digitalisation through the integration of innovative technologies with the electricity system.

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EU legislation

Directive EU 2019/944

“Demand response” means the change of electricity load by final customers from theirnormal or current consumption patterns in response to market signals, including inresponse to time-variable electricity prices or incentive payments, or in response to theacceptance of the final customer's bid to sell demand reduction or increase at a price inan organised market.

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EU legislation

• Engaging consumers requires appropriate incentives and technologies such assmart metering systems. Smart metering systems empower consumers becausethey allow them to receive accurate and near real-time feedback on their energyconsumption or generation, and to manage their consumption better, to participatein and reap benefits from demand response programmes and other services, andto lower their electricity bills.

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EU legislation

Article 11. Entitlement to a dynamic electricity price contract

1. Member States shall ensure that the national regulatory framework enables suppliers tooffer dynamic electricity price contracts. Member States shall ensure that final customerswho have a smart meter installed can request to conclude a dynamic electricity pricecontract with at least one supplier and with every supplier that has more than 200 000 finalcustomers.

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EU legislation

Article 17. Demand response through aggregation

1. Member States shall allow and foster participation of demand response throughaggregation. Member States shall allow final customers, including those offeringdemand response through aggregation, to participate alongside producers in a non-discriminatory manner in all electricity markets.

Article 13. Aggregation contract…

2. Member States shall ensure that, where a final customer wishes to conclude anaggregation contract, the final customer is entitled to do so without the consent of thefinal customer's electricity undertakings. Member States shall ensure that marketparticipants engaged in aggregation fully inform customers of the terms and conditionsof the contracts that they offer to them.

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EU legislation

2. Member States shall ensure that transmission system operators and distribution systemoperators, when procuring ancillary services, treat market participants engaged in theaggregation of demand response in a non-discriminatory manner alongside producers onthe basis of their technical capabilities.

3. Member States shall ensure that their relevant regulatory framework contains at leastthe following elements:…

d) an obligation on market participants engaged in aggregation to be financially responsiblefor the imbalances that they cause in the electricity system; to that extent they shall bebalance responsible parties or shall delegate their balancing responsibility in accordancewith Article 5 of Regulation (EU) 2019/943

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EU legislation

4. Member States may require electricity undertakings or participating final customers to payfinancial compensation to other market participants or to the market participants' balanceresponsible parties, if those market participants or balance responsible parties are directlyaffected by demand response activation. Such financial compensation shall not create abarrier to market entry for market participants engaged in aggregation or a barrier toflexibility. In such cases, the financial compensation shall be strictly limited to covering theresulting costs incurred by the suppliers of participating customers or the suppliers' balanceresponsible parties during the activation of demand response…..

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EU legislation

Article 32. Incentives for the use of flexibility in distribution networks:

1. Member States shall provide the necessary regulatory framework to allow and provide incentivesto distribution system operators to procure flexibility services, including congestion management intheir areas, in order to improve efficiencies in the operation and development of the distributionsystem.In particular, the regulatory framework shall ensure that distribution system operators are able toprocure such services from providers of distributed generation, demand response or energystorage and shall promote the uptake of energy efficiency measures, where such services cost-effectively alleviate the need to upgrade or replace electricity capacity and support the efficientand secure operation of the distribution system.

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EU legislation

Article 6. Balancing market:

Balancing markets, including prequalification processes, shall be organised in such a way as to: ensure effectivenon-discrimination between market participants taking account of the different technical needs of theelectricity system and the different technical capabilities of generation sources, energy storage and demandresponse; ensure non-discriminatory access to all market participants, individually or through aggregation,including for electricity generated from variable renewable energy sources, demand response and energystorage; respect the need to accommodate the increasing share of variable generation, increased demandresponsiveness and the advent of new technologies.

Article 12.1. Dispatching of generation and demand response:

The dispatching of power-generating facilities and demand response shall be non-discriminatory, transparentand market based

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Demand side response

Demand side response: ability of electricity consumers toset/modify withdrawal level in response to short-term pricechanges

Related topics:

• Flexibility: DSR is part a broader search for sources of flexibilityin power systems featuring increasing share of non-controllablerenewable primary sources

• Distributed resources: DSR is expected to come (also) fromconsumers connected to distribution networks

• TSO – DSO Nexus

• Interruptible consumers have traditionally been paid for andrelied upon by system operators to address emergencysituations

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Rationale for financial support to DSR

The narrative underlying policy measures supporting DSR resources

a. In the power systems of the future, based on renewable uncontrollable primary sources, flexibilitycurrently provided by thermal generators Will have to be replaced

o Undisputed, but when?

b. Distributed resources may become an efficient source of supply flexibility

o Thanks to digitalization the cost to consumers to give up consumption can be dramatically lowerthan cost of alternative sources of flexibility, i.e. storage?

c. Some frictions that prevent DSR development to be market led.

o Otherwise no support would be needed

o Frictions could relate to: i) deployment of ancillary technologies (automation) ii) flaws in theprice formation mechanism iii) flaws in the market design? iv) abnormal risk that DSRinvestment might pay-back; v) mobilization/implementation times …

… and those frictions are temporary, so that support will eventually cease to be necessary andmarkets will be enough.

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Agenda


1. EU legislation









8. Europe

9. United States

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“A” European target model

Intraday transactionsLong term transactionsDay-ahead

transactions

some time day D-1DA gate closure

24:00 day D-1 T - 1hourID gate closure

Balancingpower

procurement

Reserve capacity

procurement

timehour T (Real time)Consumpt’s/Inject’s

Imbalancesettlement

Capacity remuneration mechanism

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Integration of DSR in day-ahead / intra-day markets

What are the market design features that allow marketparticipants to make consumption decision dependent of DA/ ID market prices?

• The possibility to place price-dependent buy-bids in theDA / ID markets, or

• Balancing groups comprising generation and withdrawalpoints (a market design allowing “self-balancing”)

Demand

Supply

Q

P

P*

Q*

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How DSR participation in DA/ID markets works

• Consumer and Supplier agree on a price-dependent consumption schedule

Example: “Consumer has the right and the duty to buy from Supplier a Contractualconsumption plan at a fixed price P.

Every morning by 10 A.M. Consumer notifies the price he Asks to decrease consumption fromthe Contractual plan by 1 MW and the price he offers to increase production by 1MW, foreach hour of the following day

• Supplier hedges in the DA/ID market the position taken vis a vis Consumer

• Supplier notifies Consumers the volume of flexibility accepted

• Scheduling to the System operator takes place as usual and Consumer is charged for his own imbalances

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How DSR participation in DA/ID markets works - 2


transactions




Imbalancesettlement

Supplier hedges baseline

consumption (sold fixed-price to

consumer)

Supplier submits bids/offers reflecting

the consumer’s flexibility

Supplier’s pre DAM position notified to BRP

Supplier’s post DAM position notified to BRP

BRP is settled imbalances

BRP takes balancing position based on his

expectations of his portofolio’s behavior

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Implementation requirements for DAM/IDM participation of demand

• Consumer has the ability to and, at the current DA and ID prices, finds it profitable to adjustload in the DA/ID time frame

• Consumer is hourly metered

Observations for later reference:

• for DA/ID participation of demand, real time knowledge of the consumer’s withdrawals innot necessary. After (hourly) meter data are collected, it is possible to verify if theconsumer’s actual withdrawals depart from the schedules agreed with Supplier. In otherterms, meter readings provide all information necessary to settle (i) Consumer’s contractwith Supplier and (ii) Supplier’s position - possibly through the Balance responsible entity –vis a vis the system operator;

• Under the arrangements we have assumed so far, the supplier’s P&L is not materiallyaffected by the consumer’s behavior, since the imbalance risk is moved to the BRP. Thisfeature becomes relevant to understand the rationale for a Flexibility provider, which weintroduce next.

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Integration of DSR in near real-time markets

What are the market design features that allow market participants to make consumption decisiondependent of near real-time market prices?

• The possibility to place price-dependent buy-bids in the ancillary service markets

• An agent, possibly other than the supplier, responsible for delivery of flexibility at each networkpoint that is eligible to participation in the balancing/ ancillary service market. We will call thisagent Flexibility Provider (FP) or Aggregator

Two reasons for that:I. It is recognized that economic agents other than the traditional electricity suppliers might be more effective in

“mobilizing” consumers, by discovering previously undetected flexibility margins and by setting up the technical and contractual facilities to exploit them at little or no cost for consumers. By singling out “flexibility provider” responsibilities, you allow such parties to operate independently of suppliers and BRPs.

II. System operators do not want to interact with each and every flexible consumers. The flexibility provider is meant as an aggregator of flexible resources. This is why flexibility providers are also called aggregators. f

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How DSR participation in near real time markets works

• Consumer and Supplier agree on a the usual supply contract

• Bids/offers in the ancillary service/balancing market, for delivery in Consumer’s connectionpoint, are placed by the Consumer’s Flexibility Provider

• The Flexibility provider sells a change of consumption from actual level at the time of thesystem operator’s call.

Example: Balanced BRP and FP

time

MW

Actual consumption

Final notification(@ gate closure)

3.5 MW

SO accepts 2MW offer by FP in the balancing market for 30 minutes

t t+1 t+2

𝐴𝑐𝑡𝑢𝑎𝑙 − 𝐹𝑃 𝑑𝑒𝑙𝑖𝑣𝑒𝑟𝑦 = 𝑁𝑜𝑡𝑖𝑓𝑖𝑒𝑑 → BRP is balanced𝐹𝑃 𝑑𝑒𝑙𝑖𝑣𝑒𝑟𝑦 ≡𝐴𝑐𝑡𝑢𝑎𝑙@𝑡 × 30′ − 𝐴𝑐𝑡𝑢𝑎𝑙 = 𝑆𝑂𝑐𝑎𝑙𝑙 → FP is balanced

FP delivery

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How DSR participation in near real time markets works - 2

Example: Balanced BRP; Imbalanced FP

time

MW

Actual consumption


3.5 MW


t t+1 t+2

𝐴𝑐𝑡𝑢𝑎𝑙 − 𝐹𝑃 𝑑𝑒𝑙𝑖𝑣𝑒𝑟𝑦 = 𝑁𝑜𝑡𝑖𝑓𝑖𝑒𝑑 → BRP is balanced𝐹𝑃 𝑑𝑒𝑙𝑖𝑣𝑒𝑟𝑦 ≡𝐴𝑐𝑡𝑢𝑎𝑙@𝑡 × 30′ − 𝐴𝑐𝑡𝑢𝑎𝑙 < 𝑆𝑂𝑐𝑎𝑙𝑙 → FP is imbalanced

FP delivery

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How DSR participation in near real time markets works - 3

Example: Imbalanced BRP; Balanced FP

time

MW

Actual consumption


3.5 MW


t t+1 t+2

𝐴𝑐𝑡𝑢𝑎𝑙 − 𝐹𝑃 𝑑𝑒𝑙𝑖𝑣𝑒𝑟𝑦 > 𝑁𝑜𝑡𝑖𝑓𝑖𝑒𝑑 → BRP is imbalanced𝐹𝑃 𝑑𝑒𝑙𝑖𝑣𝑒𝑟𝑦 ≡𝐴𝑐𝑡𝑢𝑎𝑙@𝑡 × 30′ − 𝐴𝑐𝑡𝑢𝑎𝑙 = 𝑆𝑂𝑐𝑎𝑙𝑙 → FP is balanced

FP delivery

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Implementation requirements for participation of demand to balancing /ancillary service markets

• Consumer has the ability to and, at the current near-real time prices, finds it profitable toadjust load at short notice

• FP monitors on a continuous basis each flexible consumer’s withdrawals

• SO monitors on a continuous basis each FP’s aggregate withdrawals

• BRP is notified of any FP bid/offer accepted in the balancing/ancillary service market.

Observations:

• For the first condition to hold, especially for small consumers, remote control of loads mightbe necessary

• Real time monitoring of the consumer’s withdrawal is the price to pay in order to separateBRP and FP obligations

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Virtual Power Plants

Dashboard

Optigen Optibid

Dispatch instructions

Flexibility Provider

Flexible resources

Unit’s consumption

Portfolio’s consumption

Bids/offers in BM

(dispatch calls)Accepted bids/offers

Transmission system operator

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Integration of DSR in capacity remuneration system

• The traditional approach to planning for generation adequacy sets the capacity requirementbased on expected (peak) load

• In this perspective, a flexible consumer is not a “supplier of capacity” but a consumer that doesnot contribute to the system’s capacity requirement

• Consistently, in case a capacity remuneration scheme is in place, a flexible consumer should beexempted from contributing to the scheme, as far as it commits to reducing withdrawals whenthe electricity price is high

Why may we need to pay a flexible consumer for capacity?

• The average/marginal cost gap

• Uncertainty and investments for flexibility

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Integration of DSR in capacity remuneration system - 2

The average/marginal cost gap

• The allocation of the cost of the capacity remuneration system to consumers typically implementssome averaging, so that each consumer might end up paying more or less than the capacity costcaused to the system

• In this case, correct price signals could be sent to flexible consumers by requiring them to pay forcapacity (like all the other consumers) while participating in the capacity remuneration system asa supplier of capacity

Uncertainty and investments for flexibility

• The risk that price spikes do not occur with the expected frequency might discourage consumers’investment to make their load flexible (IT, organization, …)

• Participation in the capacity remuneration scheme allows to transfer that risk to (all) consumers

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Model 0: Waiver of capacity charges for flexible consumers

• C declares to SO 700 kW as maximum inflexibleconsumption

• C pays for capacity only on 700 kW

• Any withdrawal above 700 kW must be offset byBM offers

• “Severe” imbalance prices on consumptionabove 700 kW in case BM offer accepted

Note: no direct participation of flexible load in thecapacity remuneration mechanism

How DSR participation in capacity remuneration system works

1.2 MW Actual load

1 MW Baseline

700 kW Inflexible

Consumption in excess of 700 kW to be bid in BM

Can be withdrawn without any flexibilityobligation

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Consumption in excess of 700 kW to be bid in BM

Can be withdrawn without any flexibilityobligation

1.2 MW Actual load

Model 0’: Capacity beyond inflexible share sold in the capacity remuneration system

• C declares to SO 1 MW Baseline Consumption (=expectedconsumption) and 300 kW Flexibility

• C pays for capacity on entire Baseline

• C sells 300 kW capacity in Capacity Remuneration System

• Any withdrawal beyond 700 kW must be offset by BM offers

• “CRS” under-delivery penalties (+ energy imbalance prices)on consumption above 700 kW in case BM offer accepted

Note: C has an incentive to overstate Baseline and Flexibility if“capacity tariff surcharge < marginal CRS price” → difficult toenforce

How DSR participation in capacity remuneration system works - 2

1 MW Baseline

300 kW Flexibility

700 kW Inflexible

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Min (300 kW, actual) Must be bid in BM

Actual load

Model 1: Italian model

• C declares 300 kW Flexibility and Baseline(expected) total consumption

• C does not pay for capacity on the flexible share ofhis load

• C to offer: min(300 kW, Actual consumption) inCapacity Remuneration System

• energy imbalance prices + capacity under-deliverypenalties

How DSR participation in capacity remuneration system works - 3

300 kW Flexibility

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DSR in the Turkish market design


transactions



Balancingpower

procurement

Reserve capacity

procurement


Imbalancesettlement

Capacity remuneration mechanism

day D-2

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Agenda


1. EU legislation









8. Europe

9. United States

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Overview of EU DSR schemes

Source: (SEDC, 2017)

A 2017 study of explicit DSR in Europe conducted bythe Smart Energy Demand Coalition (SEDC, 2017),highlights the range of regulatory procedurescurrently in operation regarding the access ofaggregators to European DSR markets.

This map ranks the EU Member States in relation toeach other, and that even where countries are shownas green on the map, further improvements are bothpossible and necessary

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EU countries with demand aggregation

Countries where DSR and demand aggregators are commercially active:

• Great Britain

• France

• Germany

• Switzerland

• Ireland

• Belgium

• Finland

• Denmark

• Italy

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EU Experiences: UK

UNITED KINGDOM

Great Britain (GB) was the first country to open several of its markets to consumerparticipation in Europe.

• Demand side flexibility can be offered in the day ahead market.

• Almost all ancillary services are open to demand response, even via aggregators

• The Capacity mechanism is also accessible to demand aggregators.

• Aggregators cannot participate in the Balancing Mechanism.

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EU Experiences: UK

• There are currently nineteen Commercial Aggregation companies listed on National Grid’swebsite (TSO), of which six companies hold a supply licence (supplier-aggregators) whilstfour other companies work in partnership with a licenced supplier; leaving nine stand-alone aggregation service companies.

• The TSO facilitates the ‘Power Responsive’ programme (National Grid, 2017) to stimulateincreased participation in DSR by 2020. One of the outcomes for the programme will beto ensure that DSR is fully integrated in the balancing the system.

• To date Power Responsive has been focused on I&C customers only, but it will also involvethe smaller nondomestic and domestic sector in the near future

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EU Experiences: UK

Ancillary Services

• The ancillary services markets currently provide opportunity for independent aggregators toparticipate in the market. Aggregators don’t need prior permission from suppliers to enterthese markets and they can aggregate small loads from across the country (Exeter University,2019, Barriers to Independent Aggregators in Europe).

• In June 2018 National Grid announced that they had procured over 50% of their ancillaryservices from decentralised resources (including demand) in the preceding month.

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EU Experiences: UK

Capacity Market

Most of the awarded DSR Capacity Market contracts have been negotiated via aggregators(Business Green, 2018).

Despite the addition of auctions in 2015/16 and 2016/17 which were designed specifically tosupport DSR involvement, several issues have been identified with participation (CRA, 2017).Most of these are in relation to perceived discrimination when comparing DSR with generation:

1. DSR providers are currently only awarded one-year contracts in the CM (as opposed to the3year and 15-year contracts available for refurbished generation and new-build generationrespectively). This has been seen as a principal concern of aggregators as it can affect theiraccess to finance (CRA, 2017).

2. CM Rules didn’t originally allow for the stacking of contracts between the CM and theancillary services products. This potentially reduced the profitability of DSR as stackingenables access to several different revenue streams simultaneously

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EU Experiences: UK

Capacity Market

Auction Delivery Year DSR All Storage (incl. battery) Clearing price per

kW per year

2014/15 T4 2018/ 19 174 MW 0.35% 2699 MW 5.48% £19.40

2015 / 16 T4 2019/ 20 476 MW 1.03% 2617 MW 5.65% £18.00

2016/ 17 T4 2020/ 21 1410 MW 2.69% 3201 MW 6.11% £22.50

2017/ 18 T4 2021/ 22 1207 MW 2.39% 2680 MW 5.32% £8.40

2015/16 TA 2016/17 803 MW N/A N/A N/A £27.50

2016/17 TA 2017/18 312 MW N/A N/A N/A £45.00

2017/18 T1 2018/19 443 MW 7.65% 104 MW 1.8% £6.00

Source: EMR Delivery Body, collated from respective Final Auction Results Documents (Exeter, 2019)

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EU Experiences: UK

Network charges

TRIAD charges. Transmission Network Use of System charges are based on the consumer’s averagewithdrawal during three half-hour periods of highest system load. Suppliers may issue triadwarnings to induce customers to reduce load at likely triad times.

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EU Experiences: UK

Balancing Market

• There is no access for independent aggregators to the BM, the main source of balancingresources for the TSO.

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EU Experiences: UK

Participation of demand in the markets

DSR can balance the BRP’s portfolio. Tempus Energy (an Aggregator now BRP and supplier) focuses on demand flexibility to balance their portfolio

Demand can participate in DA and ID markets

DSR can participate in the CRM. Remuneration is subject to auction results. The payments of reserve capacity are split in availability (£/MW/h)and utilization (£/MWh).

FFR (Firm frequency response: dynamic and non dynamic). Aggregated demand allowed but minimum bid of 1 MW.

FRFS (Fast reserve firm service). 50MW minimum bid size; 10-15activations per day. Not attractive forDSR

Short Term Operating Reserve (STOR). Smaller providers ì, including demand side, under 3MW may also participate via an aggregator

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EU Experiences: France

FRANCE

France is the only Member State in Europe, which has opened both the ancillary services markets andwholesale market to Demand Response via independent aggregators. This is made possible because therelationship between aggregators and retailers/BRPs has been regulated in 2013 and a standardisedframework is put in place. It is also one of only 3 Member States (Finland, GB and France) where residentialconsumers can be involved in the program.

Since 2003, large industrial customers been participated in the balancing mechanism, and from 2007, thefirst pilots were run in order to introduce aggregated residential load to the mechanism. In 2014, for thefirst time an industrial consumer provided its energy reduction as a FCR or Primary Reserve. Thisprogramme, together with Secondary Reserve (FRRa), has been accessible to load participation since 1 July2014.

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Ancillary Services

These two programmes are open to Demand Response:• Frequency Containment Reserves (Réglage Primaire de la Fréquence) is directly open to

Demand Response through the FCR cooperation (with DE, AT, CH and NL)• Automatic Frequency Restoration Reserves (Réglage Secondaire de la Fréquence) is

still related to obligations for the major generators who can then sub-contract theirprovision in a secondary market.

Balancing Mechanisms

Manual frequency restoration reserves (mFRR) and replacement reserves (RR) are open toDemand Response, also by small customers via aggregators.

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DSR in French Ancillary Services


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Capacity MarketThe French capacity mechanism is a ‘decentralised market’ based on the obligation of the retailer to get a certain amount of capacity certificates depending on the consumption of its consumers’ portfolio. Capacity resources (demand response andgeneration) have the obligation to be certified and provide certificatesaccording to their expected availability.

Wholesale Market The NEBEF(“Notification d’Échangede Blocs d’Effacement”) operates since December 2014.


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Participation of demand in the markets

The aggregator does not require BRP’s agreementTSO sets a price reflecting the cost of theenergy component of the retail price, and a “contractual” and a “corrected” regime. The rules apply to electricity reductions that are bid into thewholesale market and into BalancingMechanism

Demand aggregators can participate in DA and ID markets

Tender process. Only the availability of Demand Response in the market is remunerated.

FCR, aFRR are open for demand aggregation.

• contracting with retailers andreducing the obligation of retailers through Demand Response programmes, or

• going through a certification process ofloads and acting independently.

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EU Experiences: Germany

Germany

.

Third-party aggregation is currently possible in Germany, but there are frictions due toregulatory barriers that require independent aggregators to ask the bilateral permission ofmultiple parties – including the consumer’s retailer/BRP, a potential competitor – prior tooffering a consumer’s flexibility into the market. A standardised role for third-party aggregatorswithin the market model is till missing– requiring a multitude of contractual relationshipsbetween BRPs, Retailers and the third-party aggregators)

However, the VPP architecture is in place (as it was built to integrate small scale generators).

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Balancing Markets and Ancillary ServicesThe programmes in the balancing market are open to Demand Response resources.

Interruptible LoadInterruptible loads are defined as large consumption units that can, when called upon, reduceor interrupt their demand on short notice and for a fixed minimum duration. In Germany, such aprogramme was put in place in 2013 and was extended in 2016 until 2022. The changes thathave taken place with the extension include a switch from monthly to weekly auctioning, andthe minimum bid size being reduced to 5 MW (with the ability to pool loads).

Capacity MechanismAggregation is not allowed

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DSR in German Ancillary Services


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Participation of demand in the marketsDemand flexibility exploited via the suppliers

Capacity Mechanism allows participation of demand, but aggregation is not allowed and minimum size bid is 10 MW

All balancing market and ancillary services are open for demand aggregation via VPPs.+ Interruptible load of big consumers.

DSR can balance the BRP’s portfolio

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EU Experiences: Belgium

Belgium

• Aggregators do not need the prior agreement of the customers BRP to contract with the customer. • Regulatory framework allows aggregators to sign contracts for ancillary services with the TSO after

passing a prequalification process. • Aggregated DSR can access ancillary services markets. • Domestic customers cannot participate in DSR either individually or through an aggregator.

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EU Experiences: Belgium

DSR in Belgium Ancillary Services


Very low participation

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EU Experiences: Finland

Finland

• Independent aggregators can only access markets in agreement with the customers BRP. • There is no specific framework governing the aggregator / BRP relationship. • DSR and aggregation are legally possible in all markets but technical and operational limitations exist.,

related also to large scale of load requirements in some markets.

DSR in Finland Wholesale Market


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EU Experiences: Finland

DSR in Finland Ancillary Services


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EU Experiences: Denmark

Denmark

• Independent aggregators must bilaterally contract with the consumers BRP and retailer through a prior agreement – however, there are no independent aggregators in Denmark; only retailers / BRPs currently provide aggregation services.

• Demand Side Response can enter the Wholesale Market and Ancillary services markets - but this is very limited due to little demand from the TSOs and DSOs and the minimum size requirements (10 MW).

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EU Experiences: Spain

SPAIN

Today, Spain relies mostly on hydro and gas for its flexibility needs. As Spain is evolving towards moredistributed energy generation, the need for flexibility is expected to increase in the coming years. Despitethe fact that there are certain smart grid pilot projects under development in Spain, the development ofExplicit Demand Response is yet to start.

Aggregation is not legal in the Spanish electricity system and there is only one scheme allowing DemandResponse: the Interruptible Load programme for large industrial customers. The scheme, which is reservedonly for large consumers, is managed by the TSO, Red Eléctrica de España. The programme acts as anemergency action, in case the system is lacking generation and the balance resources are not enough.

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EU Experiences: Spain

Participation of demand in the marketsDemand response allowed through BRP (retailers)

Interruptible Load contracted

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EU Experiences: Italy

Italy

in Italy as of June 2019 there are 120 VPPs qualified to operate in the balancing market, managed by 25different Balancing Service Providers, for a total of 830 MW. VPPs have both consumption and productionwithin the same perimeter and it is not possible to know the exact share of consumption over generation,although we know there is more distributed generation than consumption – being it cheaper and easier tomodulate.

Consider that currently a capacity remuneration scheme exists for VPPs; about 83% of the 830 MW falls underthis scheme.

The goal of the TSO is to reach 1.000 MW of VPP power by the end of 2019, made available under the capacityremuneration mechanism.

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USA

UNITED STATES

Demand Response Programs

Mass market includes DR programs offered to residential and small business customers:• AC switch—A program allowing a grid operator to shed air conditioning load by using a control

switch to remotely interrupt or cycle AC compressors.• Thermostat—A program that uses smart thermostats to cycle air conditioners or home heating

on and off or to adjust the temperature setting during the day.• Water heater—A program that restricts customers’ electric water heaters to run only at specific

periods during the day. Water heater programs may also incorporate other DR strategies, such asstoring hot water to shift load from on-peak to off-peak periods.

• Behavioural—Programs that incentivize customers to reduce use during peak periods with andwithout a supporting technology like those listed above. These programs may not have directfinancial incentives for participation but can be tied to a time-varying rates program. An examplewould be asking customers to reduce consumption through email, texts, social media, appnotifications, or other communications during a system peak event.

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Commercial and industrial includes DR programs or agreements offered to medium and largecommercial and industrial customers:

• Automated—A program under which a utility can remotely and automatically reduce acustomer’s load, or increase the output of behind-the-meter generation or storage, during a DRevent.

• Customer initiated with notification—A program that allows a utility to send a signal or othernotification informing its customers of a DR event and asking them to reduce their load orincrease the output of behind-the-meter generation or storage by a specified amount over aperiod of time.

• Other—A DR program for large consumers that is not covered by the above categories (e.g.,irrigation control).

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2018 Enrolled Demand Response Capacity (GW) by Program Type• Utilities reported a demand response (DR) enrolled

capacity of 20.8 GW, and a dispatched capacity of12.3 GW (59.2% of total enrolled capacity) in 2018,across both customer segments and 190 utilities.

• Mass market DR accounted for 7,4 GW of enrolledcapacity, and 4,3 GW of dispatched capacity.

✓ Air conditioning switches and water heaters arepopular offerings, with 35.8% of utilityrespondents offering AC switch programs and27.9% offering water heater programs. Theseprograms provide energy services, such asdeferring capacity and encouraging economicenergy usage.

✓ Some legacy programs (e.g., 1-way AC switchthermostat programs) are being retired or phasedout to introduce better tools in customers’ homes,accommodate for new and decentralizedgenerating sources, and provide more flexibility fordemand-side resources.

Source: Smart Electric Power Alliance, 2019. N=190 Utility Survey participants.

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Source: Smart Electric Power Alliance, 2019. N=190 Utility Survey participants.

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National Utility Demand Response Market Insights2018 Enrolled Demand Response Capacity (GW) by

Market Segment

SEPA’s 2019 Utility Survey captured dispatchable DR inboth the mass market and commercial and industrial(C&I) segments representing approximately 64.7% oftotal U.S. customer accounts. Utility participantsreported 20.8 GW of enrolled DR capacity in 2018.

Mass Market DR:• Enrolled mass market DR was reported as 7.4 GW,

35.8% of total enrolled DR captured for 2018.• At 4.5 GW, AC Switch programs provided the largest

enrolled capacity of any mass market technology.

Commercial & Industrial DR:• C&I DR accounted for 13.3 GW, or 64.2% of total

enrolled DR.• Customer initiated programs accounted for 8.1 GW

or 38.9% of the total enrolled DR, making it thelargest C&I contributor.

Source: Smart Electric Power Alliance, 2019.

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Many thanks for your attention