Business Use Case 5

Flexibility Service Providers, including aggregators with demand response and distributed energy resources as a grid service providers

An increasing amount of distributed energy resources (DER) will become available with the ongoing transformation of the European Power System, driven by the shift towards clean energy resources and the empowerment of consumers. System operators, especially at the distribution level, need to actively develop the grid and operation to remain fit-for-purpose and to enable the transition towards more distributed and small-scale generation. To allow the active participation of DER, all markets and processes need to commit to unlocking their potential. Flexibility services have great potential in contributing to congestion management, balancing and fault management. Unlocking the flexibility potential requires also respecting the roles and responsibilities of each party, taking into due consideration the different system approaches across Europe, and aiming for an efficient allocation between the different uses of flexibility. A wide range of assets, from current conventional generation plants, to industrial or small consumers dispersed in the system with demand management capability, including storage facilities, manageable RES, etc. can provide such flexibility and already participate today in electricity markets. Such flexibilities connected to the distribution network are understood and defined as distributed flexibility resources (DFR) and mostly consist of demand side flexibility (DSF).

With the growth of renewables, the increased interconnection of European grids, the development of local energy initiatives, and the specific, increasing requirements for further TSO-DSO cooperation as set forth in European legislation, TSOs and DSOs face new challenges. Effective coordination between electricity TSOs and DSOs becomes increasingly important to ensure cost-efficient, sustainable and reliable system operation and to facilitate market integration throughout Europe. Such coordination and exchange of information is required especially for services, data management, data exchange and system development.

In the Finnish-Baltic region there is a growing need to include distributed flexibility in system management as well as to enable consumers to actively respond to the changes in the system in a market-based manner. This has driven the regional stakeholders to actively seek solutions to facilitate an effective transition. In Finland the flexibility markets, including demand response, is fairly developed, with distributed flexibility participating increasingly in wholesale and reserves market (FCR-N, FCR-D, mFRR). At DSO level, the energy transition impacts more and more especially as fluctuating power flows and voltage instability and therefore grows the need to perform active power and reactive power management, potentially through DFR. Flexibility could also be an important tool for local congestion management and distribution level fault management, but currently there is no sufficient framework for procuring such DFR services in a market-based manner. It is considered important to develop data exchange and smart meter capabilities to facilitate the entering of DFR to electricity market.

Both in Estonia and Latvia the Flexibility Service Providers (FSPs) are enabled to participate in the mFRR market on the equal footing with other service providers. The activity has been fairly low due to the fact that mFRR as energy intensive product has quite low attractiveness for the flexibility providers. The automatic reserve products are not yet available in the Baltic markets since Baltic countries are currently operating in the Unified Power System (IPS/UPS). The desynchronization from the IPS/UPS is foreseen in 2025, which means an increasing importance of the flexibility to provide additional reserves needed for the system. From 01.01.2018 Baltic Common Balancing market started operating and the need for higher liquidity in the balancing market is yet another driving factor to develop an effective flexibility market in the region. DFR could also be an important tool for local congestion management, but currently this market is not developed.

With these conditions, parties from Estonia, Latvia and Finland (including TSOs and DSOs) aim to develop a regional Single Flexibility Platform under a Horizon 2020 project INTERRFACE, with an aim to speed up the realization of a flexibility market in an open development environment with different stakeholders.

The purpose of the development of Single Flexibility Platform demo in the region is twofold – to realize novel technical solutions to manage grid and system limitations via coordinated control of distributed flexibilities (consisting of consumption, generation and storage units) and to operate enabling, efficient and interoperable market and data exchange platforms for distributed flexibility exchange between market parties. Promoting and lowering entry barriers for active participation from DER increase liquidity in electricity balancing and congestion management markets thus driving down system costs, from which the final customers will benefit.

Single Flexibility Platform demo aims at providing opportunities to use network flexibility resources in the most optimal way by making them visible and available for all network operators (both DSOs and TSOs) and other market participants in the demo region who can make use of them in coordinated manner.

The platform and the developed functionalities will be connected to the IEGSA (Interoperable pan-European Grid Service) architecture to allow for enhanced interoperability across actors, networks, and timeframes.

Addressed to:

Two possible options in this regard:

  1. It can be carried out by a company that has consumers or prosumers with whom they can design this type of test under a pre-agreement to apply and design demand response programs – focus on independent aggregators and DFR.
  2. It can be carried out by a company that wants to develop the software that will allow to a trading company of electrical energy or aggregation company to implement demand response programs and grid services.

Type of service: mFRR for TSO

Manual Frequency Restoration is a manual change in the operation set-points of the reserve (mainly by re-scheduling), in order to restore system frequency to the set point value frequency and, for a synchronous area consisting of more than one load-frequency control area, to restore power balance to the scheduled value.

Technical details

The company acting in the role of a Flexibility Service Provider (FSP) including aggregator with demand response and distributed energy resources as a grid service provider is expected to connect to the API of the developed IT systems and offer their flexible resources to the piloted market. This means that the FSP would be required to be able to carry out an activation with a specified flexible resource. APIs to be published in 2021.

Countries: Estonia, Latvia, Finland

More specific requirements may differ between and in INTERRFACE service design deliverable on page 24. Available at:

http://www.interrface.eu/sites/default/files/publications/INTERRFACE_D3.1_V1.0.pdf

Type of service: congestion management short-term and operational for DSO and TSO

Within the framework of the H2020 INTERRFACE project, the aim is to pilot additionally to mFRR, new congestion management products:

  1. congestion-management short-term product will be carried out on the day ahead (D-1) time horizon
  2. congestion management operational product will be carried out on the operational hour (H-1) time horizon.

These are new local products in the Finnish-Baltic electricity system that almost meet the standard conditions of the manually activated frequency reserve mFRR product, but additionally the identification code of the metering point has been added along with some additional parameters.

Congestion management products will be used internally by TSOs / DSOs for congestion management in short-term planning and operational planning timeframe (not for balancing markets).

Default mFRR product description is proposed to boost liquidity (flexibility products of congestion management operational and short-term should be sufficiently aligned to permit the market-based allocation of flexibility between these different purposes (balancing and congestion management) with the objective of an efficient allocation that maximises the value of flexibility services for FSPs.

Technical details

The company acting in the role of a Flexibility Service Provider (FSP) including aggregator with demand response and distributed energy resources as a grid service provider is expected to connect to the API of the developed IT systems and offer their flexible resources to the piloted market. This means that the FSP would be required to be able to carry out an activation with a specified flexible resource. APIs to be published in 2021.

Countries: Estonia, Finland

More specific requirements may differ between countries and in INTERRFACE service design deliverable on page 36-38. Available at: http://www.interrface.eu/sites/default/files/publications/INTERRFACE_D3.1_V1.0.pdf.

Demo area

Demo Area 1 (congestion management and balancing), in Finnish-Baltic region (Finland, Estonia and Latvia).

Description of the business case

Initiative

Offering flexibility to the electricity markets using the Finnish-Baltic Single Flexibility Platform demo framework under pan-European architecture IEGSA

Exact Workflow

A FSP has to submit their resources for resource qualification before it can be forwarded to one or more markets where it can be traded and bidded on. The registration is handled by the Flexibility Register which also stores the trading results and receives metering data. May need parallel registration and agreement signing with local TSO / DSO.

The DSO-TSO Coordination Platform determines which System Operator is responsible for the qualification of which particular resource or a set of resources and uses preconfigured procedures to perform the resource qualification. The qualification result is returned and stored into the local Flexibility Register.

Resource data that should be submitted by FSPs to be able to proceed with product and bid qualification processes.

The requirement is that the identification code of the metering point should be connected to DSO network.

Expected outcome

  • Flexibility resources (demand side response, generation or storage) under the control of FSP shall be registered and qualified for providing mFRR and/or CM service.
  • FSP makes mFRR and/or CM bids based on qualified resources. At least 5 bids per week should be submitted during the period of active demonstration.
  • mFRR and/or CM bids can be activated by System Operators subject to system needs.
  • Activated bids are financially and balance settled by relevant System Operators. FSP needs to follow relevant national electricity market rules (e.g. Balance responsibility, Balance Service Provider rules and System Use rules).

Important information for applicants

Information from INTERRFACE public deliverables: http://www.interrface.eu/public-deliverables.

Third Parties from the fields of energy service provision, network operation and start-ups focused on providing grid services aimed to extend INTERRFACE state-of-the-art technologies and provide new energy services that will be adopted by operators and consumers are welcomed to apply.

Added value on INTERRFACE project

How this service/tool will interact with the INTERRFACE system (the IEGSA or the local tools and applications that are being developed by the demos)

The development of business models that are innovative and can be profitable in the short-term future. Through this innovative model the Third Parties will be more competitive, more innovative and will develop a know-how respect to electricity user consumers behaviour and energy markets.

  • Lowering of barriers for participation of demand-side and small-scale DER flexibility – Flexibility Register will enable flexibility resource and product qualification for all FSPs
  • To solve internal congestions for different timeframes, TSO/DSO could use flexibility with locational information for congestion management
  • By creating a Single Market Interface, flexibility can be offered simultaneously to more than one System Operator and across markets
  • Digitalization of settlement processes of flexibility activation will take place in Settlement Unit

Incorporation of Third Parties in particular for household consumers

The flexible resources can be owned by households (as well as other actors) which can participate through aggregation. This way households can financially benefit from participating in the flexibility markets:

  • To secure competition and the supply of flexibility at the most competitive price
  • Enabling more integrated RES by increased flexibility usage by TSOs and DSOs

Third Parties benefit from getting involved in the business case

The development of business models that are innovative and can be profitable in the future. The need for the services offered by Third Parties is a fast growing trend. Through this innovative model the Third Parties will be more competitive, more innovative and will develop a know-how respect to electricity user consumers behaviour and energy markets. In addition, users of the IEGSA / Finnish-Baltic demo will be rewarded for participation in the electricity markets, making the integration of users into the electricity market possible and opening new business models by the integration of these users.