Retail energy market – EDSO’s views on flexibility

EDSO –

Linked to EDSO’s response to the European Commission’s consultation on the retail energy market reported in newsletter no. 14 (2014), EDSO has published its views on flexibility. The aim of the report is to aid the EC’s understanding of what is meant by flexibility, why it is necessary for DSOs to be able to procure /use it, and explaining existing set-ups and the steps necessary for making the most of what it can offer. The paper distinguishes between flexibility which is aggregated, bought and sold on the market and that which is procured locally (and through direct contracts) by the DSO in order to maximise the security of supply and the quality of service in the most efficient way. These services are referred to as “system flexibility services” in the paper, which explains that using these for voltage control and congestion management could provide clear benefits for DSOs, grid users and society as a whole, such as:

• Optimised distribution network capacity investments
• Reduced technical losses
• Reduced curtailment of distributed generation and reduced outage times
• Increased distributed generation hosting capacity.

The paper also recommends the following steps to make the most of flexibility:

• DSOs as regulated companies with limited leeway must be allowed to procure system flexibility services in all timescales and to recover their costs in an appropriate manner
• New market models reflecting the real value of flexibility should be set up
• Network operator cooperation is pivotal for optimising grid planning and operation
• Communication standards are needed for a secure exchange of data between DSOs and flexibility providers, as well as between the DSO and the TSO
• Engaging consumers will require appropriate incentives and technologies for demand-side flexibility to deliver its full benefits
• Incentivising distributed generators to adapt their power output based on network use is necessary to enable a more efficient use of the existing distribution assets.

The two principal European consumer organisations, ANEC and BEUC, have since made public a letter to the EC on their retail market consultation, detailing their views on a number of matters relating to smart grids, metering and demand response. They call for clear commitments as to what the benefits delivered to consumers from the roll-out of smart technologies are, and for demand response programmes to be based on understanding market opportunity and consumer outcomes. Also called for are easy, free and usable interfaces that provide consumers with understandable and practical information on their energy consumption (historic and current) but that will also a) facilitate interoperability and connectivity with other home appliances and b) that allow consumers to use and share their readings with third party service providers. Furthermore, the consumer organisations would also like to ensure that those consumers not able to shift their load or take advantage of time-differentiated tariffs in demand response programmes are not penalised by paying more for peak time energy. Finally, full data protection and privacy throughout the whole smart metering and smart grid systems are highlighted as crucial.

The Council of European Energy Regulators (CEER) also published its own response to the public consultation in which smart grids are listed as one of the key drivers for the evolution of retail electricity markets. Regarding the role of the DSO, CEER states that “the existing large differences among Member States should be taken into account” but also that “It would be advisable to harmonise at EU-level decisions regarding which activities are considered to be commercial and which are not”.

> Further reading: EDSO views on Flexibility (May 2014), EC retail market consultation, ANEC/BEUC letter, CEER response to consultation, EDSO Internal News Update No.14 (2014)