Last week, Electron headed to Paris to attend Enlit Europe 2023. At our stand in the SmartEn zone and at the expert talks throughout the three days, we had the chance to hear plenty of interesting perspectives and flexibility trends. From the impact of non-firm connections to Article 32, keep reading for an overview – or watch the video below for a quick recap of the event.
1. Incentives are required to encourage consumer participation in flex initiatives
Many of the speakers shone a spotlight on consumers and the importance of driving more awareness to create engagement around flexibility. We picked up on this theme at the Energy Innovation Summit earlier this year too. This is something we’re big on at Electron – how we ensure that both the system and the end consumer benefit from flexibility.
Hanne Pittomvils, System of the Future Analyst from Elia, spoke at the event. She shared her thoughts around the need for financial incentives to provide access to flexibility and to unlock consumer-side flexibility.
Shaping market design to encourage innovative business models and facilitate the integration of flexibility into the broader energy landscape is key to making that possible.
Elia’s latest report on energy flexibility – “The power of flex” – also shares the need for plug and play approach to flexibility – which is what ElectronConnect aims to provide, with its API-first design and user-friendly UX. But to really unlock consumer adoption, we need more standardisation and interoperability across the whole flexibility ecosystem.
The report also shares that real-time price signals will help break down barriers to demand response scenarios. A new and competitive ecosystem will instead emerge.
This aligns with the open ecosystem we proposed in a recent blog. It’s also what we’re building towards with Arup and Energy Systems Catapult as part of our successful DESNZ bid to help create the shared digital needed for the UK flexibility market.
This is all about continued competition and innovation to ensure flexibility – and the energy transition as a whole – evolves at pace and at the lowest cost to end consumers.
2. A network code is needed on demand response principles
There was also an emphasis on the creation of a network code on demand response.
This would encourage a set of standardised principles on the side of the operator and incentives on the side of the flex providers. The creation of a network code on this topic was again addressed in the new European Commission communication, “Grids, the missing link – An EU Action Plan for Grids”, on accelerating the roll-out of electricity grids.
The upcoming network code sets the framework for demand-side participation in flexibility with the aim to address remaining regulatory barriers. The aim is to adopt this code in 2025.
This topic reflects our blog series on the three pillars required to drive Net Zero grid optimisation through neutral flex marketplaces. We shared that the industry needs to standardise in the right way, to drive competition and innovation. It seems that the industry, at large, agrees.
3. A market-based approach is the ideal under Article 32
A new paper on alternative connection agreements in the Netherlands highlights sections of Article 32 of Directive (EU) 2019/944 around the flexibility obligations placed on Distributed System Operators (DSOs).
Article 32 outlines the need for a regulatory framework to encourage DSOs to procure flex, demand response, or energy storage services, “where such services cost-effectively alleviate the need to upgrade or replace electricity capacity.”
Ofgem shares that Article 32 obligates DSOs to buy flexibility services through “transparent, non-discriminatory, and market-based procedures.”
With the focus on market-based procurement, this puts the onus squarely on the shoulders of platforms like ours to help them deliver on that obligation.
4. Non-firm connections in the EU are sparking debate
Discussions also continue around the use of non-firm connections in the EU. The new EU Action Plan for Grids calls for the establishment of a framework for non-firm connection agreements.
The roll out of non-firm connections should be considered alongside the other sources of flexibility available to DSOs. For example, it needs to consider how non-firm connections may affect the cost of flexibility bought through other channels, such as markets, or the liquidity of those markets.
Other options are opening up to European DSOs, such as market-based procurement, flexible connections, or network tariffs. As these develop, we need to make sure that this flexibility still benefits both the system and the end-consumer.
This is happening in the UK. Electron is even currently working on a project to link up local flexibility markets and the network systems used to support non-firm connections – a project known as BiTraDER.
5. There’s recognition around the potential of hot water cylinders for flexibility
The final trend is that we heard a lot about the potential of hot water cylinders as a source of flexibility from multiple attendees.
As heating across Europe is electrified and we move away from fossil fuel-fired combi boilers, hot water cylinders could potentially provide a significant source of flexibility for system operators. With the right operation, these can effectively work as thermal batteries across the distribution system.
The trick will be to enable their participation in flexibility markets, and thereby unlock further benefits of the energy transition to the end consumer.
