Integration of DERs on power systems: challenges and opportunities

The integration of large amounts of distributed energy resources (DERs) as photovoltaic solar generation, micro-cogeneration, electric vehicles, distributed storage or demand response pose new challenges and opportunities on the power sector. In this paper, we review the current trends on: i) how consumers adopting DERs can self-provide energy services and provide other services at system level, ii) what can be expected at distribution networks and how retail markets will evolve with more proactive and market engaged consumers, iii) what are the effects and integration of DERs on wholesale markets, and iv) what are the challenges that DERs pose on cybersecurity and the opportunities for improving system resilience. Several recommendations are given for achieving an efficient integration of DERs. For instance, the design of a comprehensive system of prices and charges and the elimination of existing barriers for market participation are crucial reforms to achieve a level playing field between distributed and centralized resources when providing electricity services. This paper summarizes part of the work developed under the MIT Utility of the Future study

Profitability analysis on demand-side flexibility: A review

Flexibility has emerged as an optimal solution to the increasing uncertainty in power systems produced by the continuous development and penetration of distributed generation based on renewable energy. Many studies have shown the benefits for system operators and stakeholders of diverse ancillary services derived from demand-side flexibility. Cost-benefit analysis on these flexibility services should be carried out to determine the profitable applications, as well as the required adjustments on energy market, price schemes and normative framework to maximize the positive impacts of the available flexibility. This paper endeavors to review the main topics, variables and indexes related to the profitability analysis on demand-side flexibility, as well as the influence of energy markets, pricing and standards on revenue maximization. The conclusions drawn from this review demonstrate that the profitability of flexibility services considerably de-pends on energy market structure, involved assets, electricity prices and current ancillary services remuneration.Peer ReviewedPostprint (published version

Demand-Side Flexibility for Energy Transitions: Policy Recommendations for Developing Demand Response

As a follow-up to IRGC's report on demand-side flexibility for energy transitions, this Policy Brief highlights that increasing flexibility in power systems is needed to accommodate higher shares of non-controllable and intermittent renewable generation, and that this requires changes to the market design and regulatory framework, to facilitate the development and deployment of appropriate technologies and market-based instruments (e.g. taxes and subsidies). The Policy Brief focuses on demand response (DR), since it is emerging as a powerful demand-side energy management option to deliver flexibility. Specifically, DR can contribute to reducing overall electricity consumption or shifting demand in such a way that consumption better follows generation, particularly intermittent wind and solar

Reassessing competition concerns in electronic communications markets

Central features of today’s electronic communications markets are complementarities between the different layers of the value chain, substitutability between some applications, network effects in the provision of content and services, two-sided business models that partly involve indirect revenue generation (such as advertising and data profiling), and a patchwork of regulated and unregulated segments of the market. This complexity requires a fresh look at the market forces shaping the industry and a rethinking of market definitions and of the assessment of market power. This article presents the state of play in European electronic communication markets, with a particular emphasis on the recent development of “over the tops”. We also use a stylised model of an electronic communications market to draw some central lessons from economic theory and to elaborate on market definition and market power

Evaluating consumer investments in distributed energy technologies

The adoption of solar photovoltaic and electrical energy storage by end users depends on their economic attractiveness, which is typically assessed with metrics of future cash flow such as Net Present Value (NPV). Yet analyses using NPV typically do not account for the evolution towards low-carbon electricity systems in the short and long term. We show this to be of critical importance for accurately calculating the profitability of these technologies. By linking an energy system model with a power system model, we observe substantial differences between NPV estimates calculated with and without representing potential evolutions of the electricity system. Our results suggest that not accounting for short- and long-run changes in the electricity system could underestimate the NPV of an investment in photovoltaic and storage by around 20%, especially in scenarios with high levels of renewables, moderate flexibility, and high electrification in the energy system. Using system-dependent cash flow metrics can have a major impact on end-users' energy technology profitability

Evaluating consumer investments in distributed energy technologies

The adoption of solar photovoltaic and electrical energy storage by end users depends on their economic attractiveness, which is typically assessed with metrics of future cash flow such as Net Present Value (NPV). Yet analyses using NPV typically do not account for the evolution towards low-carbon electricity systems in the short and long term. We show this to be of critical importance for accurately calculating the profitability of these technologies. By linking an energy system model with a power system model, we observe substantial differences between NPV estimates calculated with and without representing potential evolutions of the electricity system. Our results suggest that not accounting for short- and long-run changes in the electricity system could underestimate the NPV of an investment in photovoltaic and storage by around 20%, especially in scenarios with high levels of renewables, moderate flexibility, and high electrification in the energy system. Using system-dependent cash flow metrics can have a major impact on end-users' energy technology profitability

Enabling Innovation In The Energy System Transition

Innovation in the electric sector has the potential to drive job growth, decrease environmental impacts, reduce rate payer costs, and increase reliability and resiliency. However, the traditional electric system was built to deliver a controlled flow of energy from a centralized location with maximum reliability and minimum cost. As both customer expectations and generation technologies change, new avenues for grid innovation are being explored. Residential customers, commercial and industrial clients, and electric utilities must all find a way to balance goals for decarbonization and social justice with maintaining a least cost, reliable power grid. Grounded in Geel’s energy system transition framework, this dissertation explores how each of these three stakeholder groups is navigating the transition to renewables. The first study tests the idea that residential customers will be more inclined to change their behavior when altruistically contributing to a greater goal. Renewed Darwinian theory was explored to question the exclusive use of financial incentives in demand response programs, with evidence that enabling altruism may influence electricity demand even more effectively than traditional financial incentives. A difference in differences approach was designed to test the impact of the Burlington Electric Department’s Defeat the Peak program on residential energy use where the incentive was a group donation to a local charity. Results suggest utility savings of over $12 in energy supply costs for every$1 they invested in the program. Financial levers, however, can be quite effective in influencing electricity demand, and may result in cost-shifting from high to low demand consumers. The second study focused on rate design for commercial and industrial customers through an analysis of the utility demand charge. For over a century the demand charge has been a primary means to recover total cost-of-service including fixed, embedded, and overhead costs. Under the current system, most small commercial and residential customers do not receive a strong direct price signal to invest in storage, load shifting, or renewables. Larger commercial and industrial customers exercise some measure of control over their loads to reduce demand charges, but with only modest benefit or value to the system as a whole. The system costs are then redistributed to all customer classes, potentially falling disproportionately on low demand customers. To investigate, a regression analysis was conducted with cost and market characteristics from 447 US electric utilities. Results suggest that demand charges predict a significant degree of variability in residential pricing, confirming suspected cost shifting. Redesigning the demand charge could open up new markets for renewable energy entrepreneurs and lower grid costs and customer rates, supporting goals of decarbonization while also achieving reliable least-cost power. In the third study, an iterative approach was employed to understand why some utilities lean into the energy system transition while others take a more conservative stance. A database of 170 US electric utilities was constructed including a qualitative assessment of Integrated Resource Plans for renewability orientation. Institutional resource-based theory was utilized to take a striated approach to understanding firm heterogeneity, identifying factors at the individual manager level, firm level, and external environment that can influence a utility’s energy supply characteristics. Independent variables in a simultaneous regression analysis included CEO gender and tenure at the individual level, ownership structure and firm age at the firm level, and the impact of policies and state rurality at the inter-firm level. Results indicate that a significant amount of a utility’s commitment to the renewable energy transition can be predicted based on these firm characteristics

New actor types in electricity market simulation models: Deliverable D4.4

Project TradeRES - New Markets Design & Models for 100% Renewable Power Systems: https://traderes.eu/about/ABSTRACT: The modelling of agents in the simulation models and tools is of primary importance if the quality and the validity of the simulation outcomes are at stake. This is the first version of the report that deals with the representation of electricity market actors’ in the agent based models (ABMs) used in TradeRES project. With the AMIRIS, the EMLab-Generation (EMLab), the MASCEM and the RESTrade models being in the centre of the analysis, the subject matter of this report has been the identification of the actors’ characteristics that are already covered by the initial (with respect to the project) version of the models and the presentation of the foreseen modelling enhancements. For serving these goals, agent attributes and representation methods, as found in the literature of agent-driven models, are considered initially. The detailed review of such aspects offers the necessary background and supports the formation of a context that facilitates the mapping of actors’ characteristics to agent modelling approaches. Emphasis is given in several approaches and technics found in the literature for the development of a broader environment, on which part of the later analysis is deployed. Although the ABMs that are used in the project constitute an important part of the literature, they have not been included in the review since they are the subject of another section.N/