Flexibility – barriers and challenges in Europe

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Eight flexibility platforms are reviewed as being at implementation stage covering a broad range of functional and design characteristics.

The growth of intermittent renewable energies and the need for more flexibility in the electricity system has led to the development of numerous platforms and interfaces to manage these resources and coordinate them across the distribution and transmission systems to manage local and national constraints and balancing.

Distribution system operators (DSOs) are having to take on a more active role in system management and greater coordination is needed with the transmission system operators (TSOs), giving rise to challenges in meeting these requirements.

With a view to assessing these, as well as identifying and promoting best practices, the European transmission system operators’ association ENTSO-E and Frontier Economics have undertaken a review of platforms in the region. From these eight were selected for focus, based at being an implementation stage at the time of the research and covering a number of different possible design characteristics, such as procurer type, platform operating model, etc.

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These are:
• DA/RE in southern Germany being developed by TransnetBW and Netze BW.
• The blockchain based Equigy crowd balancing platform in the Netherlands, Italy, Austria, Germany and Switzerland, owned by a consortium of TSOs.
• GOPACS in the Netherlands, owned and operated by TSO TenneT and DSOs Stedin,
Liander, Enexis and Westland.
• INTERRFACE demonstration project in Latvia, Estonia and Finland owned and operated by a consortium of TSOs, DSOs and energy exchanges.
• NODES originally set-up and operated by the power exchange NordPool and Agder Energi. Two implementations are NODES-IntraFlex in the UK, launched by DSO Western Power Distribution; and NODES-NorFlex in Norway, launched by TSO Statnett and DSOs Agder Energi, Glitre Energi, and Mørenett.
• Piclo Flex in the UK, owned and operated by independent software company Piclo.
• eSIOS-CECRE-CoordiNet in Spain, owned and operated by TSO Red Electrica de España.

Functions performed by these flexibility platforms with varying levels of involvement include asset registration and prequalification, notification of flexibility requirements and submission of offers, coordinated grid impact assessment and priority of access, matching, price formation, issuing dispatching instructions and activation and validation and settlement.

Flexibility challenges

Key challenges identified relate to resource integration with issues including proportionally high entry costs and weak participation incentives, whilst TSOs/DSOs may perceive greater levels of risk in contracting with distributed resources than utility-scale assets.

Coordination between TSOs and DSOs is increasingly important and requires more active management of system processes. In this regard, technical and institutional barriers to information sharing and collaboration will need to be overcome in order to ensure that responsibility for system stability and security of supply can be effectively delivered.

The third area of challenges pertain to market design with issues around alignment of market arrangements and product specifications may need to be addressed.

In conclusion the report states that moving forward, platforms will need to continue engaging with their stakeholders, i.e. both TSOs and DSOs as well as flexibility service providers, to understand and adapt to their respective business cases.

In parallel, regulatory authorities may need to be increasingly mindful of the evolving requirements of flexibility platforms and possible unintended consequences that their activities may have. For example, fragmented local markets for flexibility may create liquidity problems and require increased level of coordination across markets to manage imbalances created by activation.

Furthermore, better integrated local and national flexibility markets may improve the ability of flexibility providers to ‘stack’ revenues across both local and national schemes which may incentivise greater levels of overall participation.

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