When one speaks of flexibility in the electricity sector, one usually means the possibility to adjust the electrical consumption or the electrical production of an installation or process. This could be in response to a price signal, the grid frequency, or an activation signal from the grid operator.
Different technologies have flexibility, often without their operators being aware of it:
- Consumption flexibility, better known as demand response: temporary reduction or increase of the consumption of an industrial process, electrolysers, a household, etc.
- Production flexibility: increase or decrease the production of power plants. In addition to large power plants, CHPs, emergency power generators and renewable power plants are also eligible.
- Storage flexibility: pumped hydropower plants such as those of Coo-Trois-Ponts, lithium-ion or redox flow batteries, or flywheels allow energy to be stored and later be released.
To estimate the flexibility of a consumption process, flexible production installation, or energy storage system, one looks at the extent to which the power can be adjusted in relation to normal business operations. Three questions can help here:
The answer to these questions helps to identify in which application the flexibility can best be used. These applications are briefly described in the following section.
- In which direction can the electrical power be controlled? Reducing consumption or increasing production is upward flexibility, increasing consumption or decreasing production is downward flexibility.
- How quickly can the power be adjusted? Can one react within a few seconds or within a few minutes?
- For how long can the power be adjusted? For a few minutes, a few quarters, or for several hours?
Flexibility is worth money
Flexibility can be exploited in different applications. Broadly speaking, we can distinguish the following categories:
- Take advantage of price fluctuations on the power exchanges (learn more about it here). This allows you to shift your consumption to moments with lower prices, or your production to moments with higher prices.
- Offer flexibility as balancing energy (balancing markets) to the grid operator. The grid operator compensates providers for the provision of these system services.
- Respond on the basis of expected fluctuations in imbalance prices. This is also called reactive balancing.
All these applications contribute to maintaining a stable grid where supply and demand for electricity are equal at all times. Next Kraftwerke will be happy to identify with you where your flexibility is worth the most and make an estimate of your income without obligation. You can contact us through this form.
Long-term views for flexibility
Flexibility through decentralised production and consumption processes is essential in today's energy landscape and will become even more important in the long term:
- There is an increasing electrification of the transport sector, heating of buildings, and in industry. These are driving up total demand for electricity and the volatility of electricity demand.
- Belgian and European power generation is becoming increasingly renewable, with variable production and large 'ramp rates' (speed of increase or decrease of injection into the grid) of solar and wind farms.
- Historically, conventional generation plants (gas-fired, coal-fired, etc.) provided the majority of balancing energy. These power plants are no longer competitive with renewable technologies in several European countries and are gradually disappearing from the production park. Decentralised flexibility can take over their role by being part of a virtual power plant such as Next Kraftwerke's.
There is still a large unused potential for upside and downside flexibility in demand response and in distributed generation. Both consumers and producers are often unaware of the flexibility available to them. Take a look at Next Kraftwerkes Products and services to discover how your processes can be put to work on the energy markets.
The California ‘duck curve’
A well-known example that illustrates the need for flexibility is the Californian 'duck curve' (see the graph above, Source: California ISO).
California began renewable electricity generation early on and since 2010, the number of PV installations has grown enormously. The duck curve shows how the increase of PV plants reduces the residual load on the grid (end consumption minus decentralised generation) around noon. But in the evening, when the solar energy production decreases and at the same time the consumption increases due to the evening sky, the residual load increases rapidly. This has to be provided by central production units. It is a challenge for conventional power plants to increase their production so quickly. Moreover, due to the increase in decentralised renewable production, these power plants can run fewer and fewer hours on an annual basis, which means that some of them are no longer profitable.
In addition, this example also shows that the grid is not used optimally. At the hours of the lowest net demand (i.e. during the afternoon hours), the grid is used far below its capacity. When demand peaks, the grid is used up to its limits. Using more (decentralized) flexibility can provide an answer to these problems.
Players on the energy market
|Player||Function (short)||Function in the unbundled European energy system (long)||Examples for Belgium|
|Producer||Generates electricity||Produces electricity in a power plant. This can be a nuclear, coal fired or STAG plant, offshore wind park, CHP etc. The producer possibly offers ancillary services to the grid operator if the plant can be flexibly controlled.||Independent power producers like farmers with a CHP, Engie Electrabel, EDF Luminus|
|Consumer||Consumes electricity||Uses electricity to drive industrial processes, household appliances, provide lighting or heating etc.||Industry, companies and households|
|Prosumer||Both consumes and produces electricity||Is both taking electricity from the grid when own production is not self-sufficient and puts on the grid when own production exceeds own consumption.||Household or company with solar PV installation|
|Transmission system operator (TSO)||Transmission of electricity on the high-voltage grid||Transmitting electricity generated in large plants over long distances. High voltages up to 400kV are used to limit the line losses. The TSO is the final responsible to keep the instantaneous demand and supply balance.||Elia|
|Distribution system operator (DSO)||Distribution of electricity on the low-voltage grid||Distribution of electricity to the end consumer, at voltage levels typically between 400V to 70kV.||Eandis, Infrax, Sibelga, RESA, ORES|
|Energy supplier||Supply the electricity to households and small companies||After the unbundling it is no longer the DSO who sells the electricity to the end-consumer. Consumers can choose which supplier they prefer (depending on the tariffs and services offered).||Eneco, Engie Electrabel, EDF Luminus, Ecopower, Lampiris, E.ON|
|Balancing responsible party (BRP)||Balances electricity injection and intake at its access point||Based on consumption and/or production data and forecasting of the client, the BRP has to make balanced nominations to the grid operator. Each party injecting to or taking from the grid needs to have a BRP.||Large producers or consumers are their own BRP, for small end-consumers, the supplier arranges the BRP responsibilities|
|Regulator||Guards the level-playing field of the free market||Since the transmission and distribution grid are operated as natural monopoly, there has to be an independent party which checks the TSO and DSO are not abusing their market power. They also keep an eye on producers and consumers, to make sure (large) players do not try to influence the prices.||CREG (Commisie for the Regulation of Electricity and Gas, federal), VREG (Vlaamse Reguleringsinstantie voor de Elektriciteits- en Gasmarkt, Flanders), CWaPE (Commission Wallonne Pour l’Energie, Wallonia)|
|Power Exchange||Energy trading platform||Power Exchanges are used for anonymous and transparent energy trading. A multilateral trading platform is set up, where market participants submit demand or supply bids. The market operator will aggregate all the demand bids and all supply bids and clear the market once every 15min (in Belgium). The products offered on the power exchanges are standard products for which the demand is high enough to ensure liquidity and a good price.||EPEX Spot Belgium|
|BSP (Balancing Service Provider)||Provides balancing services to the network operator and provides access to the energy markets for decentralised units||This is a new role created by the Belgian grid operator. A BSP offers flexibility with one or more sites on the balancing markets of the network operator. The BSP is independent of the supplier and can therefore valorise the flexibility of third parties. A large consumer or producer can become a BSP itself and offer its flexibility directly to the network operator. Decentralised units, however, use aggregators such as Next Kraftwerke to pool their flexibility with other installations.||Next Kraftwerke|