SP2016 keynote: Marijn De Koning, USEF
Unlocking the Value of Flexibility
USEF is the Universal Smart Energy Framework. A market model that enables the trading of flexible energy use and enable the active market participation of all involved. Quite a wonderful phrase. But how does that mean exactly? And how does it work?
With solar rooftops and wind farms, more sustainable sources are being added to the energy mix. This means:
•More local production.
•More local players.
•And more up- and downloads of energy anywhere in the system.
When looking at the 2030 targets, this is good news, provided we are able to embed these renewable sources in our system in a constructive way. Because they are causing much larger variations in energy flows and a lot more complexity. Our system was not designed to facilitate more interaction. Flexibility hasbecome a modern day value that everyone wants. It is the antidote touncertainty.
•Flexibility makes buildings stronger.
•It makes your body work better.
•It makes your schedule looser.
With the grid under increasing stress as a result of growing reliance on electricity and the introduction of new renewables technologies and electric vehicles, the role of the DSO is increasingly challenging. The risk of outage is rising and increasing daily and carries a significant financial penalty. Shoring up or replacing parts of the system is expensive, time-consuming and adds to complexity.
USEF helps the DSO to mitigate risk and play a smarter role in the system. It delivers easier access to Prosumers’ flexible supply and demand by making their active participation in the grid possible. This can be used to alleviate grid stress and defer or avoid grid upgrades. It also encourages prosumer reliance on the grid by providing them with the opportunity to benefit financially. This reduces the likelihood of their defection as storage technologies become more readily-available, making self-balancing achievable.
Reasons to get involved for a DSO are: Access to localized control power; Regulatory framework for smart energy in a grid; Standardised interaction Aggregators, etc.
The consumer role in the energy market is changing. We have access to more real-time information about our energy use and the associated costs. This allows us to make better choices to reduce bills. The introduction of multiple pricing mechanisms will offer financial incentives to encourage us to shift our usage to periods when overall demand is low, to reduce system stress. Many consumers have become prosumers, also generating energy via solar panels. Interconnectable smart appliances and apps are creating smart homes that we can interface with and control.
The real revolution will come from unlocking consumer flexibility. Some of our energy use is not essential, or non-time- critical, and so we can be flexible about it. We could get paid for that flexibility by selling it to grid operators and those balancing supply and demand. They could then choose to move it in time, or not supply it at all, to help reduce periods of stress on the system. Given that a proportion of our bills are to pay for the system, helping reduce stress will lower our bills. USEF makes these things possible by delivering the market, tools and rules required to commoditise and trade energy flexibility. It also specifies the role of an Aggregator, who would buy flexibility from multiple consumers and collate enough if it to offer as solutions for system stress.
Reasons to get involved for a Residential prosumer are: Reduce your electricity bills; Make money from selling your flexible energy use; Reduce your environmental footprint, etc.
Reducing or better timing energy use or better timing it can significantly reduce costs for a business. You can also benefit financially by selling your flexible energy use to energy system parties, either directly, or via an Aggregator. Where energy use is not time-critical, they buy the ability to move it to reduce stress on the grid or to avoid buying energy when prices are high. Access to back-up power supplies could also be sold as flexibility for use in emergency situations, allowing your company to be switched on to it when the grid is stretched and demand needs to be reduced quickly, or to be called on in grid blackout situations.
USEF unlocks the value of this flexibility by turning it into a tradeable commodity (UFLEX) and delivering the market structure and tools and rules to make it work effectively. Adopting USEF can therefore provide new income, reduce or limits energy bills, and help your organisation be more sustainable. You may also choose to become an Aggregator based on USEF’s role description and interaction model.
Reasons to get involved for a Business prosumer are: Securing energy supply; Profiting from own flexibility; Easy access to energy markets, etc.
USEF helps interested parties to understand the nature of the opportunity that the new Aggregator role offers and provides the tools to act on it. It makes the boundaries of an Aggregator’s business model clear, without limiting opportunities. USEF defines the role and delivers the related interaction models and sample technical references. These things are particularly important where the role is of interest to companies not currently active in the energy markets but that have existing retail relationships and expertise.
As well as gaining early access to commercial prosumers with the highest volumes of flexibility to sell, the first Aggregators to adopt USEF will play a role in setting the standard for the function, effectively creating a hallmark for the future which they can then apply to generate customer confidence in their brand.
Reasons to get involved for an Aggregator are: Easy access to energy markets; Clear definition of role and responsibilities; Standardised interaction with key market players, etc.
Governments have to make the decisions which balance climate change targets with security of supply and consumer price sensitivity. The former make renewables a necessity but they introduce system challenges because of their variability and also create a drive towards decentralised energy, with consumers becoming prosumers and possibly defectors with the arrival of small energy storage technologies.
USEF addresses these challenges by providing a framework that unlocks the value of flexible energy use and providing the market structure and related tools and rules to commoditise and trade flexibility. The framework has energy users at the heart of the energy system and enables and incentivises all market stakeholders to work together towards and cleaner, more efficient, future proof energy system. By creating a common standard on which to build, it extends existing wholesale processes to incorporate flexibility, guaranteeing the interoperability of all roles, projects and markets. Its market-based control mechanism then ensures that the whole system is optimised to ensure that energy is always produced, managed, delivered and used in the most efficient and cost-effective way.
Reasons to get involved for Governments are: Internationally aligned framework for an energy flexibility market; Empowering energy prosumers and unlocking their distributed potential; A comprehensive smart energy market interaction model, etc.
USEF unlocks the value of flexibility in a way that is closely related to current working procedures and offers a common standard for the development of new flexibility services. By building on this one common standard, solutions are more rapidly scalable and future connectability is assured.
Reasons to get involved for Supplier are: Opens up new services and business models; Closer involvement with clients; Improves synergy in the energy value chain, etc.
Forecasting, and actively balancing, supply and demand in the most economical way have become increasingly challenging for the BRP. More renewables technologies and higher electricity reliance have made their portfolios less predictable, leaving them susceptible to imbalance charges and having to buy any shortfall during peak price periods. USEF helps to mitigate these risks.
USEF offers a standardised way to incorporate flex to avoid imbalance and optimise your portfolio in a way that is closely related to current working procedures. Reasons to get involved for a BRP are: Access to a large pool of distributed flexibility; Standardised interaction with a variety of market parties (aggregators); Opportunities for new business models, etc.
Responsible for operating the energy system on a larger and often national scale, the main focus for the TSO is maintaining overall balance within the system. While system balance managment mechanisms are strictly regulated, to achieve it, they rely on BRPs. TSOs indirectly benefit from USEF because, by unlocking flexibility and enabling it to be commoditised and traded, the framework helps optimise BRPs portfolios, allowing them to keep their own balance easier plus offer improved balancing capacity to the TSO. This makes system operation easier and therefore cheaper.
The TSO also at times faces congestion issues related to the transmission of electricity, for example over interconnection points with other countries, or where there are capacity issues as a result of maintenance etc. USEF eases these system pressures significantly by unlocking the availability of localised capacity for re-dispatch.
Reasons to get involved for a TSO are: Access to larger pool of control and balancing power; Access to distributed control power for solving local operation issues; Larger availability of control power will lead to lower prices, etc.