From wholesale energy markets to local flexibility markets: structure, models and operation

Most energy markets (EMs) across Europe are based on a design framework involving day-ahead, intraday, and bilateral markets, operating together with balancing markets. This framework was set out, however, when the vast majority of generation units were controllable and fuel-based. The increasing levels of renewable generation create unique challenges in the operation of EMs. In this context, flexibility markets are starting to be recognized as a promising and powerful tool to adequately valorize demand-side flexibility. This chapter describes the models underlying both centralized and bilateral markets, analyzes the operation of several European markets, introduces some energy management tools, analyzes the pressing issue of flexibility in system operation, and describes various pioneering flexibility platforms.info:eu-repo/semantics/publishedVersio

Aggregation of thermostatically controlled loads for flexibility markets

This paper presents a tool for an aggregator of thermostatically controlled loads (TCLs) to optimally combine their flexibilities into a few representative bids to be submitted to flexibility markets. The tool employs a “bottom-up” approach based on physical end-use load models, being the individual flexibility of each individual TCL simulated with a second-order thermal model describing the dynamics of the house. The approach is based on a direct load control (DLC) of thermostat temperature set-point by the aggregator. End-users receive an economic compensation in exchange for the loss of comfort. The applicability of the proposed model is demonstrated in a simulation case study based on an actual power system in Spain.The research leading to this publication has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 691405

Flexibility markets to procure system services. CoordiNet project

The article describes the objectives of the CoordiNet project, the proposed coordination schemes and architecture to allow TSOs and DSOs to procure systems services in a coordinated manner, and the platforms being developed in the three demonstrators of the project (Spain, Sweden, Greece).The efficiency and reliability of electricity systems depend, among other aspects, on an efficient collaboration between the different market participants, which require updating the roles of all agents involved. The CoordiNet project, co-funded by the EU, intends to demonstrate how TSOs and DSOs can act in a coordinated manner, to purchase and activate system services, promote the cooperation of all actors and eliminate barriers for the active participation of DERs in the market. The results of the project will help to design scalable tools and methodologies for system operators and third parties to safely connect, manage and coordinate flexibility providers. This paper describes the developments in CoordiNet to ensure the interoperability of the different markets and platforms developed by TSOs and DSOs across Europe.European Commissions' H2020 under grant agreement No 824414

Network aware local flexibility markets : Business case analysis

The power system is undergoing a period of transformation towards a cleaner, more resilient, and just paradigm based on renewable energy and distributed energy resources. The period of transition from a fossil-fuel based system towards a renewable-based one is full of opportunities, but also challenges. The role of distribution grids in this new paradigm will change due to an increased share of renewable generation assets connected to them, and less predictable load profiles. Active management of distribution grids is not an option anymore, but a necessity to maintain a safe and reliable power system. This thesis work is focused on exploring on such method of active management of the distribution grids using the flexibility from multiple sources available via network aware flexibility market. The particular focus of the work is on exploring the business model of a network aware local flexibility market. Local flexibility markets are one of the options that distribution system operators are exploring to actively manage their grids. This thesis research the business model impact caused by the addition of network aware capabilities into (local) market clearing algorithms. Therefore, it studies through a business case analysis how this innovative solution influences market dynamics (and market participants), and it also studies the impact on the business model of the market operator. Two complementary approaches have been used to evaluate the impact on market dynamics and the impact on the business model. First, for the market dynamics a business case study has been performed. On it, market clearing events have been simulated using the algorithms developed by DTU. Second, for the business model impact analysis the results of the business case have been combined with industry insights gained during discussions along the development of the thesis. From the business case analysis, the main conclusions are that: with enough liquidity in the market the network aware algorithms can perform as good as their non-network aware counterparts. Therefore, on average, market participants will not be affected by the implementation of network aware algorithms. From the market operator perspective, it is true that the use of network aware algorithms requires higher computational power, but this could be expected since the algorithms have added features. When it comes to the business modelling work, interesting discoveries have been made. The implementation of network aware algorithms for market clearing has a direct impact on the market operator business model. The new network aware market operator will have to perform new tasks as: (confidential) data collection and storage, and possibly new roles and responsibilities will be attributed to it. One of the main uncertainties of the business model according to the industrial partners consulted is the liability over failed market clearings. Up until now if the security and quality of supply were bad, the system operator was responsible for that. With network aware local markets, such responsibility is blurred between the system operator and the market operator. In this thesis the study of the business model for a network aware local flexibility market has been performed, giving relevant insights on the opportunities and challenges such business idea entails. Furthermore, during the development of the research work future topics for research have been presented to further explore new business models for local market operator

Market Design of Regional Flexibility Markets: A Classification Metric for Flexibility Products and its Application to German Prototypical Flexibility Markets

With a growing number of distributed energy resources, the electricity network is challenged with a higher quantity of technical problems such as capacity congestions and over- or under-voltages. One often-discussed approach to solve these problems, especially in the European zonal electricity system, is regional exibility markets. We provide a novel metric for the design of exibility products by combining technical requirements with a background in auction theory. This is a valuable contribution to the discussion of regional exibility markets, which currently occurs on a largely technical or conceptual level. The metric structures 23 product parameters in four stages of di_erent abstraction levels. By applying this metric to _ve exibility market approaches used in current German research projects, we demonstrate its usability for consistent description and comparison of exibility products. Therefore, the metric we have developed, is a powerful instrument for structured analysis and assessment of the vast diversity of approaches to exibility markets and products at a high level of detail. This metric can empower national and international policy makers and practitioners in developing and assessing exibility markets holistically and can help to simplify the implementation of best-practice solutions

The role of regulators in promoting the procurement of flexibility services within the electricity distribution system: a survey of seven leading countries

This paper identifies and explores regulatory issues that may have an impact on the use of flexibility services by distribution utilities to solve grid constraints. This can be done by flexible distributed energy resources which can be instructed, for instance, to reduce export generating capacity or increasing consumption. We want to identify how regulation can better support the development of the future distribution utility in its role as neutral market facilitator, enabling more competition in local flexibility markets and optimal use of resources. A set of questionnaires were designed to capture the insights around important aspects of the regulation of flexibility markets (utilities’ network incentives, network tariff structure, market design for flexibility markets, etc.). These were sent to distribution utilities, energy regulators, energy marketplaces, energy associations and relevant experts from seven jurisdictions. The responses suggest a collective interest in the procurement of flexibility services by distribution utilities from distributed energy resources. New regulations, the adaptation of current rules and recent consultations reflect this. However, the amount of progress with and preferences for key regulatory changes differ across jurisdictions.The authors acknowledge the financial support of SSEN via BEIS funded Power Forward Challenge—Pilot Scale Demonstration scheme

Network-Aware Flexibility Requests for Distribution-Level Flexibility Markets

Local flexibility markets will become a central tool to procure flexibility for distribution system operators (DSOs), who need to ensure a safe grid operation against increased costs and public opposition towards new network investments. Despite extended recent literature on local flexibility markets, little attention has been paid on how to determine the amount of flexibility required at each location, considering the constraints that the network introduces (e.g. line and voltage limits). Addressing an open question for several DSOs, this paper introduces a method to design network-aware flexibility requests from a DSO perspective. In that, we also consider uncertainty, which could be the result of fluctuating renewable production or demand. We compare our approach against a stochastic market clearing mechanism, which serves as a benchmark; and we derive analytical conditions for the performance of our method to determine flexibility requests. We demonstrate our methods on a real German distribution grid.Comment: 10 pages, 7 figure

Optimised TSO-DSO Coordination to Integrate Renewables in Flexibility Markets

The necessary energy transition to decarbonize power systems is leading to increasingly important challenges for the operation of power systems. On the one hand, the intermittent nature of renewable generation requires system operators to procure ancillary services in larger volumes than in the past. On the other, the growing penetration of medium- and small-scale, flexible demand and storage systems in distribution networks could potentially offer network services, if they are aggregated effectively and there is an appropriate coordination between transmission system operators (TSOs), distribution system operators (DSOs) and aggregators. Therefore, an important topic to be analysed is whether distributed energy resources (DER) can replace traditional generation in the provision of ancillary services (AS), how this replacement will affect the system operators’ roles and how to improve the coordination between TSOs and DSOs. This paper shows the results of the cost-benefit analysis (CBA) performed within the project SmartNet to assess the advantages or disadvantages of different TSO-DSO coordination schemes, as well as the follow-up activities to be carried out in the project CoordiNet.These projects have received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreements No 691405 & No 824414

Congestion Management using Local Flexibility Markets: Recent Development and Challenges

Increasing amount of renewable based distributed generation at distribution systems, leads to an increased need for active distribution network management dealing with local network congestion and voltage issues. Development of local flexibility markets aims to provide a market-based solution to these issues. This paper presents a comprehensive review of proposed approaches towards markets exploiting the flexibilities from the demand-side. Efforts have been made on presenting a systematic overview of market design, including e.g. framework, participation, bidding and clearing mechanisms, of local flexibility market proposals developed in recent years. The implementation and regulatory issues and challenges are also discussed. The paper also presents the conceptual framework of the local flexibility service market which is currently being developed within UNITED-GRID project. This proposal aims to provide a holistic approach on local service markets, so that Distribution System Operators (DSOs) are provided with a market-based instrument to manage their networks efficiently