Archive

Five key actions for activating household demand-side flexibility

Comments Off on Five key actions for activating household demand-side flexibility

If the video is not visible, please accept all cookies to enable the player.

Securing a clean, efficient and affordable power system is a complex undertaking in the best of times. The current energy crisis, however, has compounded the challenge with a cost-of-living crisis, the need to free Europe from its dependency on Russian fossil gas, and the ever-present spectre of climate change. A seemingly insurmountable task begs all available resources. One of the most powerful — and often undervalued — solutions is household demand-side flexibility.

Empowering and rewarding consumers who are able to shift how and when they use electricity is a vital power system resource. Demand-side flexibility contributes to a reliable and decarbonised power system while reducing costs, a critical outcome for low-income and disadvantaged households.

On 28 September, the Electrification Academy was pleased to welcome Sophie Yule-Bennett to unpack the insight and recommendations from RAP’s 2022 study The joy of flex: Embracing household demand-side flexibility as a power system resource for Europe. She explored:

  • The benefits of demand-side flexibility: sustainability, reliability, equity and affordability.
  • Barriers to flexibility as a resource.
  • Five key actions for activating household demand-side flexibility.

House power: the hidden powerhouse of the new energy landscape

Comments Off on House power: the hidden powerhouse of the new energy landscape

Raoul Dufy’s 1937 fresco La Fée Électricité — an arresting 600 square metre tribute to “the great adventure of electricity” — depicts science and technology leaps such as Faraday’s discovery of electromagnetic induction, Gramme’s direct current dynamo, Baudot’s telegraph, and Edison’s incandescent light bulb. These developments changed the world in ways that were previously unfathomable.

Tackling the climate crisis while mitigating the impacts of the war in Ukraine and skyrocketing energy prices will require Europe’s policymakers to champion a new class of energy pioneers in the months and years ahead: households.

A spectrum of challenges

Europe faces a step-change within a step-change. Securing a clean, affordable and reliable energy system is no longer a case of moving fast without breaking things. We must now accelerate while fixing things.

This means ramping up green generation at an unprecedented scale and pace, shunning imported gas without over-relying on expensive alternatives — such as hydrogen in its rainbow of varieties — or relapsing on brown fuels. We also need to secure energy supply, ensure grid reliability and help families and businesses stay out of the red.

No matter how many supply-side resources we pour into the mix, the perfect blend will elude us until we stop treating demand-side flexibility as a final flourish of glitter.

In fact, it is more like the primer — often unseen but foundational to reliability, managing price volatility, enhancing grid performance, efficiently integrating renewables, facilitating newly electrified technologies and reducing cost. Flexibility adds adhesion and endurance to the core principles of energy policy.

Demand-side flexibility binds energy, climate and social objectives together.

graphic depicting how demand-side flexibility addresses reliability equity and sustainability of energy supply

Putting households in the frame

Demand-side flexibility means energy users changing how and when they use electricity in return for financial reward. They offer flexibility by drawing power from the grid at different times and by utilising energy efficiency, onsite generation and onsite storage, including electric vehicle batteries.

We need lots of flexibility and we need it now. The IEA estimates that, to reach net-zero emissions by 2050, a ten-fold increase of demand-side resources is required worldwide by 2030, compared with 2020 levels.

Industrial response receives most of the policy attention on the demand side, which is still only a fraction of that dedicated to supply-side resources. However, European Commission analysis concluded that the greatest potential for additional customer flexibility in 2030 actually lies within homes.

This is due to the, as yet untapped nature of this sector, plus projected electrification and digitalisation of buildings and vehicles. The proportions in the graph below are striking—even though the capacity levels themselves are likely to be a significant underestimate, given the fast-paced technology and market evolution since the 2016 study.

graphic depicting the theoretical potential in megawatts of demand-response capacity in selected European countries by 2030

Policy proposals

To take advantage of these untapped resources, there are three policy actions that should be enacted.

Firstly, make flexibility effortless and stress-free. Policymakers need to stop putting the onus on individuals to solve structural problems. People are busy; they have kids to get to school, shifts to work and boilers and cars that fail at the worst times. It is not their job to become energy market experts, it is the job of energy market experts to ensure that people make decisions — even unconscious ones — that boost flexibility and reduce energy bills.

There should be an EU-wide “mandate for smartness,” requiring products and buildings to be electrified and “flex-ready,” with clear labelling and high-quality customer support. Deployment schemes are urgently required, including subsidies to fast-track uptake and drive down future costs, replicating the success of renewables.

The regulators’ role is to ensure digital inclusivity of marginalised and vulnerable groups and to adapt customer protection rules so they keep up with new retail offers, without picking winners or stifling innovation.

Secondly, allow wholesale pricing to reflect the true value of flexibility. To uncover the value of flexibility and reveal its full potential, wholesale electricity prices should reflect real-time conditions on the power system.

Interventions such as price caps mask the increased costs caused by inflexibility, reducing incentives for efficient actions. Households should be rewarded to increase demand when there is a surplus of renewable generation, for example, but measures like minimum price guarantees prevent payment via the wholesale market.

Safeguards such as supplier hedging, price relief mechanisms for extreme events and targeted support for low-income customers become increasingly important. The baseline, however, should be wholesale pricing and smart network tariffs that reward flexibility in a fair and non-discriminatory way. This creates a positive feedback loop of households embracing flexible assets and seeing tangible benefits, which further incentivises flexibility.

Finally, develop robust metrics for flexibility. Europe lacks a common methodology for assessing and quantifying the multi-faceted benefits of customer flexibility.

Unless we make this value visible and measure it consistently and fairly, we cannot reliably assess flexibility potential or design mechanisms to unlock it. Developing robust metrics supports policies that can accelerate flexibility deployment such as targets, trading platforms and obligations on suppliers to procure demand-side capacity. Standardisation also enables progress to be tracked across Member States.

To create a masterpiece, start with a masterplan

“Art is not what you see, but what you make others see.” – Edgar Degas

Flexibility is a system resource, activating it requires systems thinking. That does not mean treating households like mindless cogs in the machine — a new social contract must be crafted for the age of automation, upheld by equity, agency and opportunity.

Europe’s policymakers should take in the whole picture, rooting out market distortions, barriers to access and bad practices, while proactively showcasing and replicating positive examples of household flexibility, beyond pilot schemes.

If the artwork La Fée Électricité were recreated in the year 2035, what would we see? The fresco could show millions of homes, interacting seamlessly with the power system, for the benefit of people and planet alike.

One thing is certain, we are going to need a bigger wall.

 

A version of this article originally appeared on Foresight Climate & Energy.

Photo: Guillaume Baviere via Flickr Creative Commons

The joy of flex: Embracing household demand-side flexibility as a power system resource for Europe

Comments Off on The joy of flex: Embracing household demand-side flexibility as a power system resource for Europe

To meet its 2050 climate goals, Europe will need to purge its power sector of carbon emissions by the mid-2030s. This means integrating renewable energy resources such as wind and solar at an unprecedented scale and pace. Only one path allows for rapid decarbonisation while maintaining a reliable energy system, minimising system costs and increasing energy democracy. We must ensure that customers have the incentives and tools they need to adjust the flexible portion of their electricity use in ways that are beneficial for the system.

Flexible resources are essential to balance supply and demand and make best use of renewable generation.

In addition to climate impacts, the most recent energy price crisis has underscored the urgent need to release Europe from gas dependency — and therefore from exposure to gas price volatility — by progressing swiftly to a clean, efficient and electrified energy system.

This paper focuses on the greatest untapped source of flexible demand across Europe: household flexibility. Households can increasingly shift how and when they use electricity, without compromising utility or comfort, thanks to new digital technologies and storage. Yet, as the users with the lowest individual electricity use, they often face the greatest barriers. If enabled effectively, through inclusive access to flexible assets, markets and retail offers, there is an opportunity to improve energy services and reduce costs, which is particularly important for low-income and vulnerable households.

For household demand-side flexibility to take its rightful place in the energy transition, swift and concurrent effort is needed on multiple levels of policy and regulation. Underpinning this process is the principle that demand-side flexibility is more than an individual customer right; it’s a vital, cost-effective power system resource that should be valued as such.

Europe needs a cohesive regulatory strategy to create the infrastructure that will enable large-scale, aggregated customer flexibility. As a starting point, this paper presents a five-point action plan for scaling up household flexibility in Europe, with specific recommendations for carrying out each action.

  • Action 1: Create robust tools for measuring and valuing customer flexibility.
  • Action 2: Incentivise flexibility through energy market price signals.
  • Action 3: Ensure a level playing field for demand-side resources.
  • Action 4: Accelerate installation of flexible assets in homes.
  • Action 5: Make flexible actions easy and safe for customers.

By investing now in strategies that wholeheartedly embrace household demand-side flexibility as a power system resource, Europe can avoid paying a much higher price later.

The time is now: smart charging of electric vehicles (Webinar)

Comments Off on The time is now: smart charging of electric vehicles (Webinar)

If the video is not visible, please accept all cookies to enable the player.

European policymakers and car manufacturers are increasingly committing to the phaseout of internal combustion engine vehicles. With this shift to electric transport, tariffs and services for so-called smart charging of EVs bring significant value to consumers and the power sector. Now is the time to build a robust regulatory framework to expand the markets for these offerings consistently across the entire continent. 

On 25 May, the Electrification Academy welcomed Jaap Burger and Julia Hildermeier of the Regulatory Assistance Project (RAP) to share the findings of their study The time is now: smart charging of electric vehicles. The authors, who analysed 139 smart charging tariffs and services across Europe, shared: 

  • A brief overview of the benefits of smart charging for users and the power system. 
  • Innovative approaches and best practice examples of dedicated EV tariffs and services. 
  • Recommendations to accelerate the use of smart charging.

For an introduction to smart charging, check out our earlier Electrification Academy webinar with Frank Geerts and Michael Hogan, Smart charging puts the pedal to the metal on emobility. 

 

 

The time is now: smart charging of electric vehicles

Comments Off on The time is now: smart charging of electric vehicles

The transition to zero-emission mobility and a decarbonised energy system are best planned in tandem, and electric vehicles will play a key role in both shifts in the coming years. Automakers are already committing to phasing out internal combustion engine vehicles, making Europe’s transport future electric. EVs are more than a cleaner vehicle; they are a powerful resource for consumers and power sector actors. It is critical, therefore, to draw the most value from charging electric vehicles through so-called smart charging. Smart charging means charging a vehicle flexibly to lower costs for EV drivers and grid companies, to accommodate the integration of renewable energy sources and to minimise EVs’ collective impact on the power system.

Now is the perfect time to lay the groundwork for a robust regulatory framework that fosters a market for smart charging tariffs and services. By designing policy measures in a consistent manner across Europe, legislators can help ensure that the EV services market can prosper and capture the benefits smart charging offers. To this end, RAP analysed 139 tariffs and services available across Europe that specifically involve smart charging to highlight best practices and innovative approaches.

To ensure that all Europeans can charge smartly wherever they are on the continent, RAP recommends that policymakers:

  • Make smart charging the default everywhere.
  • Make public charging smart too.
  • Empower consumers to make informed choices.
  • Improve rewards for consumer flexibility.
  • Stack multiple services for smart charging to increase individual and system benefits.
  • Make local grids ‘smart charging ready.’

Unlocking demand-side response in Turkey

Comments Off on Unlocking demand-side response in Turkey

Turkey’s energy system has vast potential for integrating renewable energy and for smart technology innovation. Both of these advancements are crucial to decarbonise the power sector, improve grid efficiency and ensure resilience. Policy makers can play a pivotal role in helping Turkey achieve its clean energy vision by designing policies to maximise the value of renewables, encourage investment in clean technology and mitigate consequences for the grid and consumers.

A key policy tool for achieving these goals is demand-side response, meaning consumers are financially incentivised to be flexible about when they consume electricity. This involves shifting their use of energy to times that improve the efficiency of the power system as a whole, such as when the grid faces fewer overnight demands, or when there is a surplus of renewable generation. This flexibility is a powerful energy system resource that should also be rewarded as such.

In a recent study, SHURA Energy Transition Center found it is technically and economically feasible for wind and solar resources to make up at least 30% of Turkey’s power mix by 2030, with an additional 20% provided by other renewable energy resources. Key factors in this scenario are electrification of heating, cooling and transport, energy efficiency, electric vehicles and higher rates of demand response.

In this report, SHURA and RAP explore why consumer-side resources are essential for the transition to clean energy as well as their role in Turkey’s wider decarbonisation scenario. The authors outline a six-point plan for scaling up the country’s use of demand-side response.