Distributed energy resources and electricity balancing : visions for future organisation

This Report discusses how electricity balancing may best be organised in a future with greater penetration of distributed energy resources (DERs). Increased DER penetration can pose challenges to electricity balancing, while, at the same time, DERs can also help to balance the system more cost-effectively. Currently, participation by DERs in electricity balancing markets, whether individually or aggregated, is still somewhat limited. In the debate among practitioners and academics, most attention has been devoted to reducing market entry barriers for DERs. In this Report, we go one step further: we analyse whether the current organisation of the balancing mechanism is future-proof. This Report comprises an introduction, four sections and conclusions. After the introduction, Section 2 explains the working of the balancing mechanism and introduces the relevant EU legislation. Section 3 shows that the current organisation of balancing mechanisms in the EU is a legacy rather than a well-thought-through design choice. We explain that alternative setups are possible in theory and that their performance in practice depends on the context. To assess different balancing setups, we introduce a multidimensional framework and illustrate it by comparing the current setups in the EU and the US. In Section 4, we highlight the challenges that the balancing mechanism in the EU is currently facing with increasing shares of DERs. We argue that, in the medium to long term, it will become increasingly challenging to operate the balancing mechanism cost-effectively without adjusting its organisation. In Section 5, we introduce two alternative ways of organising it in the future: the ‘Super SO model’ and the ‘Local SO model’. The key question is whether it would be easier to manage seams within a balancing area or seams between balancing areas. The main challenge with the Super SO model would be that a global optimum, considering all voltage levels and local issues, is difficult to achieve. Even though the Local SO model might be more pragmatic, the main challenge with this model would be implementing it in a way that limits fragmentation of balancing markets, which would have severe implications for efficiency and competition

Limits of traditional distribution network tariff design and options to move beyond

This policy brief is based on RSCAS Research Paper No. 2018/19, titled 'Least-cost distribution network tariff design in theory and practice' by SCHITTEKATTE, Tim; MEEUS, Leonardo. Details about the assumptions, data, and formulation of the mathematical model can be found in the research paper.With more consumers installing solar PV panels, it makes sense to depart from the historical practice of volumetric distribution network tariffs with net-metering. However, regulators face many practical difficulties when redesigning the distribution network tariff design. Typically, there is a trade-off between cost-reflectiveness and fairness. We illustrate the cost-reflectiveness versus fairness trade-off and we find that some cost-reflectiveness can be sacrificed to limit the distributional impact resulting from tariff redesign. However, this works only up to a certain point without compromising grid cost recovery. If grid costs are mainly sunk, and cost-reflective charges are hard to implement, then smaller passive consumers are always worse off – tools other than ‘standard tariff options’ are needed to keep distributional impacts under control while limiting distortions

D7.4 economic framework for a meshed offshore grid

Work Package 7 (WP7) of the Progress on Meshed HVDC Offshore Transmission Networks (PROMOTioN) Horizon 2020 project focuses on various legal, financial and economic aspects of developing an integrated offshore infrastructure. Task 7.2 focuses on the development of an economic framework for the offshore grid in terms of three building blocks, namely: planning, investment, and operation. 1. Offshore grid planning comprises three topics, namely: Cost-Benefit Analysis (CBA) methods, onshoreoffshore coordination, and public participation. 2. Offshore grid investment comprises four topics: cooperation mechanisms for renewable support, transmission tariffs, investment incentives, and Cross-Border Cost Allocation (CBCA) methods. 3. Offshore grid operation focuses on the balancing mechanism in the offshore wind context. This final report extends our intermediate report with the addition of three new topics: incentives, CBCA and the balancing mechanism. The remaining chapters are identical to the intermediate report. In this section, we provide a summary of the research that has been undertaken so far and the main conclusions from our analysis.This result is part of a project that has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 691714

Review of different national approaches to supporting renewable energy development

To increase the share of RES-E, governments have designed and implemented promotional policies which provide direct and indirect financial aid to RES-E adapters and developers. These promotional policies include several instruments and support schemes. Different countries, and in some cases different governments in a country, use different combinations of these support schemes to promote different renewable technologies. In this work, we study support schemes that have been implemented since the late 1990s or early 2000s in five countries: the UK, Germany, Italy, Spain and Australia. We provide an overview of these schemes and their timelines for the following RES-E technologies: onshore wind, offshore wind, utility-scale solar PV, rooftop solar PV and solar thermal. In addition, it is important to evaluate the effectiveness and efficiency of support schemes in promoting these RES-E technologies. We tackle these two values and provide specific discussions on each country, support scheme and technology

Standing still is moving backward for the ABC of the CBA

Developments in both gas and electricity are fast moving with higher risks for stranded assets in Trans-European Networks. This puts increasingly higher demands on the CBA method that is used to select priority investments. Standing still in the development of that method would be going backward. The ABC of the CBA for so-called Projects of Common Interest (PCIs) is about: A. dealing with interactions between PCIs (coordination); B. gaining trust and public acceptance (transparency); and C. deciding where the experts stop and the politics start in the valuation of PCIs (monetisation). To deal with the interactions between PCIs, we recommend additional improvements to the clustering of projects and the baseline definition in the common CBA method; and we also recognise that individual project promoters might lack the information and resources to do this, which is why we suggest that this could become a task for the ENTSOs or Regional Groups instead of the promoters. To gain trust and public acceptance, we recommend harmonised and disaggregated cost and benefit reporting, noting that we still have a long way to go, and noting that this is not even enough because the ambition should be an open source CBA model rather than a common method. To reduce the politics, we emphasise the importance of a full monetisation of the value of PCIs, and note that we could ask the Regional Groups to express their policy priorities at the start of the process via the eligibility criteria, which would also increase the transparency of the process

Les structures tarifaires des opérateurs de distribution et des consommateurs actifs : une analyse de la régulation économique

The uptake of affordable solar PV panels challenges the way in which costs of distribution networks are recuperated from consumers. Historically, consumers were charged for the use of the distribution network mainly according to their (net) volume of electricity consumed over a period of time. With such volumetric network charges, consumers installing PV panels contribute a lot less towards the recuperation of network costs. However, these consumers (prosumers) still rely on the network as much as they did before. The question investigated in this thesis is how to re-design the distribution network tariff in this changing context. Different game-theoretical models are developed to conduct this analysis. In the models, not only investments in solar PV but also investments in batteries at the consumer-side are considered. The thesis consists of a brief overview followed by four standalone chapters and a conclusion.La diffusion des panneaux solaires photovoltaïques à prix abordables nous amène à repenser à la manière avec laquelle les coûts des réseaux de distribution sont récupérés auprès des consommateurs. Historiquement, les consommateurs étaient facturés pour l'utilisation du réseau de distribution principalement sur la base de leur volume (net) d'électricité consommé. Avec tel type de tarif de réseau, les consommateurs qui installent des panneaux photovoltaïques contribuent beaucoup moins à la récupération du coût d’investissement réseau. Cependant, ces consommateurs (prosummeurs) dépendent autant du réseau qu’avant. La question examinée dans cette thèse est de savoir comment définir le tarif du réseau de distribution dans ce contexte changeant. Des différents modèles de théorie des jeux sont développés pour faire cette analyse. Dans ces modèles, en plus des investissements dans l’énergie solaire photovoltaïque, des investissements dans les batteries du côté des consommateurs sont aussi considérés. Ce rapport de thèse consiste en un bref aperçu suivi de quatre chapitres indépendants et d'une conclusion

Capacity remuneration mechanisms in the EU : today, tomorrow, and a look further ahead

In this paper, we discuss the implementation of Capacity Remuneration Mechanisms (CRM) in the European Union (EU). We first illustrate that the costs of CRMs in the EU are significantly lower than in the US. Next, we discuss how the Clean Energy Package (CEP) intends to limit the future role of CRMs. Two steps are introduced to check if CRMs are really needed: a European resource adequacy assessment and a national implementation plan to improve current electricity market design. In case residual adequacy concerns persist, the CEP also includes provisions to guide the design of a CRM. Last, we discuss the role of the consumer in securing resource adequacy in the future