Increasing value of flexibility

Flexibility is the ability to increase or reduce the production of power plants or the consumption of demand processes. It is a valuable good in today’s energy markets and many expect that it will become even more so in the future. There are two major assumptions supporting this expectation:

  • overall demand for electricity is increasing as processes powered by fossil fuels to produce heat, mechanical and electrical power are more and more replaced by electrical processes. This could lead to more pronounced demand peaks and higher variability.

  • the volume of less predictable or even weather dependent generation becomes larger due to the increasing share of renewable energy sources like solar and wind.

Untapped flexibility potentials in our energy system offer an answer to those challenges. There are different forms of flexibility:

  • Load flexibility (demand response or demand side management): temporarily reducing or increasing the demand of an industrial plant, household…

  • Generation flexibility: ramping the production of a power plants up or down

  • Storage flexibility: pumped hydro plants like the one of Coo-Trois-Pontes, batteries or flywheels offer the possibility of storing energy in limited amounts.

After the liberalization of the energy markets in Europe, a reserve market was created in which flexibility can be offered. Initially this was mainly focused on large generators and consumers, but since 2012 Elia also introduced a reserve product in which consumers and producers connected to the distribution network could also participate: the tertiary reserve dynamic profile (R3 DP). Read more about reserve markets over here.

It is expected that there are still large untapped potentials of both upward and downward flexibility in demand response and distributed generation. Both consumers and producers are often not aware of the flexibility they have. To find out how your processes can be put at work in the energy markets, have a look at Next Kraftwerke’s products and services.

The Californian duck curve

A famous example of the challenges for the electricity as result of renewable energy generation, is the Californian Duck curve (see graph above, source: Californian ISO). California has been an early adopter of renewable electricity generation and solar photovoltaics in particular. The duck curve shows how the increase in rooftop solar drives down the residual demand at lunch time. But towards the evening the demand increases while solar generation starts to drop. This creates a very steep incline in electricity off-take from the grid. It is a challenge for conventional power plants to ramp up their production so quickly. In addition, the residual demand is overall smaller so the generation units have less operating hours to earn back the investment. It also shows that grid is not optimally used. At time of lowest residual demand, the grid is used far beneath its maximum capacity. At time of peak demand, it is stressed to its limits.